27th October, 2021, Dan Jastrzebski
Autumn Budget 2021: Response by Dan Jastrzebski
Today’s Autumn Budget 2021 announcement and Spending Review by the Chancellor focused on economic recovery and investment.
Dan Jastrzebski, partner at Stephenson Smart, analyses the main changes that will impact upon our clients and local businesses.
Business groups have been lobbying for the government to support the high street and ‘brick and mortar’ businesses by looking at business rates in this Budget.
In response, the Chancellor announced three new measures that will directly affect business rates:
Firstly, a new temporary 50 per cent business rates relief for the Retail, Hospitality and Leisure industry in the financial year 2022/23. This is alongside freezing the business rates multiplier for a second year, from 1 April 2022 until 31 March 2023, keeping the multipliers at 49.9p and 51.2p.
The government will also look to introduce a 100 per cent improvement relief for business rates from 2023. This will provide 12 months relief from higher bills for occupiers, where eligible improvements to an existing property increase the rateable value.
Also introduce targeted business rate exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100 per cent relief for eligible heat networks, to support the decarbonisation of non-domestic buildings from 1 April 2023 until 31 March 2035.
There was very little mention of tax changes in the Autumn Budget 2021 announcement. However, there are tax changes afoot that are already in progress.
The Health and Social Care Levy is due to come into effect in April 2022; the income generated from this is due to be ring-fenced for spending on health and social care. Alongside this, it was also announced that there would be a 1.25 per cent increase to dividend tax rates.
We also already know that the main rate of Corporation Tax will rise from 19 per cent to 25 per cent from April 2023.
However, the main changes to the tax system that the government are forecasting to bring in income to the Treasury are aimed at how the self-employed pay income tax.
From April 2024 there will be three main changes to income tax for the self-employed:
Sole traders and landlords with annual business or property income over £10,000 a year will be eligible for Making Tax Digital for Income Tax Self Assessment from 6 April 2024. This means that those businesses who are eligible will be required to submit their income and expenses via digital software, in a more timely, quarterly manner. Read more here.
From the same date, the government are looking to reform income tax basis periods so businesses’ profit or loss for a tax year will be the profit or loss arising in the tax year itself, regardless of its accounting date.
Lastly, the government are reforming penalties for late submission and late payment of tax for Income Tax Self Assessment, again from April 2024, for those taxpayers required to submit digital quarterly updates through Making Tax Digital.
Just these changes to tax strategy are forecast to bring in an additional £440 billion to the Treasury by 2026/27.
A surprising amount of the Chancellor’s Autumn Budget 2021 announcement was taken up by talking about alcohol duty. The main change worth mentioning is the reduction in duty on draft alcohol by 5 per cent – another welcome hand of support to the hospitality industry. However, increases to the living wage of 6.6 per cent for over 23 year olds from April 2023 could offset the reduction in duty meaning no decrease in prices for the consumer.
Our teams will look forward to further direction from the government on the announcements made today, and in the run up to the Budget, so that we can ensure our clients are compliant with any changes and managing their tax liabilities accordingly.
If you would like more detailed, one-to-one advice on any of the issues raised in the Chancellor’s Autumn Budget 2021 speech, please get in touch.
Profile: Dan Jastrzebski ACA CTA
Related Pages: Budget 2021 & Making Tax Digital
Related Articles: Autumn Budget Predictions
Further Reading: Autumn Budget and Spending Review 2021