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 income tax 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
26th October, 2021, Kayleigh Wilson
Autumn Budget Predictions
The Chancellor, Rishi Sunak will officially present his Autumn Budget and Spending Review to the Commons tomorrow, 27 October.
In this article, Kayleigh Wilson ACCA CTA, gives her Autumn Budget predictions, thoughts and analysis:
You may be forgiven for thinking that the Autumn Budget 2021 has pretty much all been announced via releases to the press; but these announcements are all the positives around spending and don’t dig into the details.
Based on these pre-announcements, we know that the Chancellor has already committed over £30 billion of investment to support economic recovery through schemes that support his government’s ‘Plan for Jobs’ and ‘Levelling Up’, although all this comes at a price and the announcements that will have the most ears will be around the measures put in place to financially support these.
We have already had a huge tax announcement this year with the planned introduction of the Health and Social Care levy that will raise National Insurance Contributions from April 2022.
This Budget also comes at the start of the government’s 10-year tax administration strategy and is being called a ‘technical budget’. This implies that the Chancellor may make technical changes that can raise revenue, rather than simply take the unpopular option of raising more taxes. An example of this is the proposed reform of basis periods for the self-employed, this is being sold as a simplification measure to help sole-traders and partnerships with the move to Making Tax Digital reporting from April 2023 but also has the potential to accelerate revenue for the Exchequer for 2023 and the next 5 years.
We know that Corporation Tax will rise from 19 per cent to 25 per cent from April 2023, but what other proposed changes might the Chancellor make to taxes in this Budget to try and balance the books?
Lots of commentators are predicting changes to Inheritance Tax and Capital Gains Tax following recent reviews by the Office of Tax Simplification. It is quite likely that the Chancellor could change Inheritance Tax Rules that would increase future revenues without directly changing headline tax rates.
Millions will get a pay rise next year when the National Living Wage is increased from £8.91 an hour, as the Treasury confirmed the move for all over-23s, on Monday.
This move supports the Prime Minister’s pledge to move Britain towards a high wage, high skill, high productivity economy.
With a lot of the Covid support schemes such as Furlough, Business Rates Relief and VAT relief coming to end, businesses will be feeling the impact on their cash flow.
There are calls from the business communities for the Chancellor to look at how business rates are calculated, to support the high street, and put some further package of support in for the hospitality and tourism industry.
We will be watching the Chancellor live as he presents to the Commons on Wednesday and analysing his announcement and the accompany documentation carefully.
Profile: Kayleigh Wilson ACCA CTA
Related pages: Budget 2021
18th March, 2021, Neil Gayton
School is now back in full swing and it does seem now like we have never been away.
Several things have changed.
First, the general state of the house. It’s miraculously tidy.
Two weeks ago there were pencils everywhere, but never one in sight, wrappers to various ‘snacks’ found in unimaginable places and greasy thumb prints on most doors, not to mention the laptop, which probably had all the ingredients of a good meal attached to it.
Secondly, it’s quiet. Previously echoes of ‘It’s not fair’ or ‘you’re on mute’ penetrated the walls, in between cries of ‘I need help’, or my favourite ‘I’m not doing it unless you star jump down the stairs’.
Thirdly everyone is dressed. Loungewear (as I understand it’s called) appeared to replace regular everyday clothes. I only know as it seemed to keep appearing in parcels through my letterbox.
I’m sure I speak for all parents when I say we tried our best, but one thing’s for sure, the boys were happy to go back to school and see all their friends.
And I was happy to finish a cup of coffee before it resembled something completely different.
It’s also been an interesting time economically with the announcement of Rishi Sunak’s Spring Budget.
Our clients have all been affected in different ways and we have been providing support for anyone needing more information.
Among the raft of measures is the extension to the furlough scheme until September and the Self Employment Income Support Scheme, with two further grants announced.
It’s also good news for our hospitality and holiday accommodation clients. The government are planning an extension of the 5pc reduced rate of VAT until September 30 and to help businesses return to the standard 20pc rate, a 12.5pc rate will apply for the following six months until March 31, 2022.
Related pages: Budget Guide
Related articles: Budget 2021: Response from Henry Pettitt
Profile: Neil Gayton FMAAT
3rd March, 2021, Henry Pettitt
This was a highly anticipated Budget that focussed on short to medium term support and recovery in light of the current financial, and overall situation, the country is in due to the Coronavirus pandemic.
In the Budget 2021, the Chancellor confirmed a continuation of the current furlough scheme until the end of June with a further extension until the end of September. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July and 20% in August and September.
In addition to a fourth Self Employment Income Support Scheme (SEISS) grant, open for applications from late April, the Chancellor also announced a fifth SEISS grant to cover May to September this year. The value of the grant will be determined by a turnover test, businesses whose turnover has fallen by 30% or more will continue to receive the full grant, those whose turnover has fallen by less than 30% will receive a 30% grant.
A Busines Rates holiday for those in retail, hospitality and leisure industries will continue with 100% business rates relief from 1 April to 30 June, followed by 66% business rates relief for until 31 March 2022. Those in the tourism and hospitality sector will also continue to be eligible for the 5% reduced rate of VAT until 30 September, a 12% rate from September to March next year, with the full 20% VAT rate not coming into force for them until April 2022.
The Chancellor also announced a freeze on income tax Personal Allowance. The current rate is set at 20% when you earn £12,500 a year and the starting point for paying the 40% higher rate tax is £50,000. The thresholds will go up to £12,570 and £50,270 in April, as planned but will then be frozen for five years. With these thresholds maintained at the same level until April 2026, many people receiving a pay rise may find themselves in a new tax bracket.
One area that the Chancellor did announce a change to tax, albeit not until 2023, was on Corporation Tax. The rate will increase from to 25% on profits over £250,000, however the rate for small businesses with profits under £50,000 will remain at 19% and there will be a tapered system of relief for businesses with profits between £50,000 and £250,000, so that they pay less than the main rate.
The one big tax announcement was that of a new Super-deduction tax. From 1 April 2021 until 31 March 2023, companies investing in new plant and machinery assets, that qualify, will benefit from a 130% first-year capital allowance. This means that companies could cut their tax bill by up to 25p for every £1 they invest.
As predicted the Chancellor did not make this Budget about tax changes but about continued support for individuals and businesses in the wake of Coronavirus. However, with ‘tax day’ looming on 23 March, when the treasury will share documents and tax consultations to inform tax policy, we are likely to see more robust tax changes in the Autumn Budget later this year.
If you would like to discuss in more detail how these changes may affect you or your business please get in touch.
Profile: Henry Pettitt
Also see: Budget 2021 Guide
25th November, 2020, Kerry Williams
In his announcement in the Commons today, Chancellor Rishi Sunak focussed heavily on public spending, especially in response to the Covid pandemic. He referred to the ‘economic emergency’ that our country is in. The Office for Budget Responsibility (OBR) forecast was that the economy would shrink by 11.3 per cent this year and not recover to its pre-Covid level until the 4th quarter of 2022.
In light of this, the Chancellor announced a raft of public spending to try and continue to protect jobs and public services, the only cut back being to pause the pay rise for public sector workers that weren’t nurses, doctors or NHS staff – apart from those currently earning less than the median wage.
He also announced a drop from 0.7 per cent to 0.5 per cent in spend on overseas aid.
The areas that were announced in today’s Spending Review that will most affect local people and businesses were the increase of the National Living Wage by 2.2 per cent to from £8.72 to £8.91 per hour, and also new National Minimum Wage rates, both will apply from April 2021.
There will also be an increase to the 2021-22 Income Tax Personal Allowance and Higher Rate Threshold, in line with inflation, from April 2021.
The Chancellor also announced today that he will freeze the Business Rates multiplier in 2021-22 and is considering further Business Rate reliefs.
You can view a full list of the economic support schemes in place for businesses during Covid in our online Business Interruption Guide.
It had been rumoured that the Chancellor would take this opportunity to start to gently prepare us all for the changes that will inevitably be made to taxes to claw back the £280 billion spent this year alone on support during coronavirus. However, it seems that we have a reprieve, at least for a few months, as it is likely these changes will now be announced in the Spring Budget.
Page 1 of 2