The Autumn Budget’s key points and how they affect industry sectors
We examine how the Chancellor’s Autumn Budget and Spending Review will affect business and different industry sectors, and consider what business owners can do to help their organisation.
Chartered Certified Accountant
Hayley Hedges-Quinn
Read on for Hayley Hedges-Quinn’s expert advice regarding the Autumn Budget's key points and what it may mean for you.
2021’s Autumn Budget in a nutshell:
1
Decision: Increasing the National Living Wage for individuals over the age of 23 from £8.91 to £9.50 an hour from April 2022.
Who this affects: Employers
What this means: The Government is looking to extend certain work schemes including investing over £900 million for each year of the Spending Review on work coaches to help jobseekers on Universal Credit (UC) move into work and support older workers via an enhanced 50+ offer. The UC taper rate is being reduced from 63% to 55%.
As an employer, look out for employment incentive schemes which can help you benefit from the wage increase. For example getting involved with the Kickstart Scheme which provides funding to employers to create jobs for 16-24 years olds on UC. It may also see an increase in people looking for employment opportunities.
Wage increases from 1 April 2022:
· National Living Wage for age 23 and over: £8.91 to £9.50 an hour
· National Minimum Wage for age 21-22: £8.36 to £9.18 an hour
· National Minimum Wage for 18 to 20-year-olds: £6.56 to £6.83
· National Minimum Wage for under-18s: £4.62 to £4.81
· The Apprentice Rate: £4.30 to £4.81
· National Living Wage for age 23 and over: £8.91 to £9.50 an hour
· National Minimum Wage for age 21-22: £8.36 to £9.18 an hour
· National Minimum Wage for 18 to 20-year-olds: £6.56 to £6.83
· National Minimum Wage for under-18s: £4.62 to £4.81
· The Apprentice Rate: £4.30 to £4.81
Who this affects: Employers
What this means: The Government is looking to extend certain work schemes including investing over £900 million for each year of the Spending Review on work coaches to help jobseekers on Universal Credit (UC) move into work and support older workers via an enhanced 50+ offer. The UC taper rate is being reduced from 63% to 55%.
As an employer, look out for employment incentive schemes which can help you benefit from the wage increase. For example getting involved with the Kickstart Scheme which provides funding to employers to create jobs for 16-24 years olds on UC. It may also see an increase in people looking for employment opportunities.
Wage increases from 1 April 2022:
· National Living Wage for age 23 and over: £8.91 to £9.50 an hour
· National Minimum Wage for age 21-22: £8.36 to £9.18 an hour
· National Minimum Wage for 18 to 20-year-olds: £6.56 to £6.83
· National Minimum Wage for under-18s: £4.62 to £4.81
· The Apprentice Rate: £4.30 to £4.81
· National Living Wage for age 23 and over: £8.91 to £9.50 an hour
· National Minimum Wage for age 21-22: £8.36 to £9.18 an hour
· National Minimum Wage for 18 to 20-year-olds: £6.56 to £6.83
· National Minimum Wage for under-18s: £4.62 to £4.81
· The Apprentice Rate: £4.30 to £4.81
2
Decision: Increase on alcohol duty for stronger drinks
Who this affects: Hospitality and beverage industries
What this means: According to the Chancellor, ‘the Alcohol Duty system will undergo a major simplification.’ A five-point plan has been devised to take effect in 2023. Essentially, drinks will be taxed according to their strength – the higher the abv, the higher the tax. However, in a bid to apparently support pubs — duty rates on draught beers and cider will be cut by 5%. The 28% duty on sparkling wines and Champagnes will end. The planned increase in duties on scotch, wine, cider and beer will be cancelled.
What this means: The new plan rewards pubs that serve draught beer and cider, low-strength beers, ciders and wines, while higher-abv drinks will attract a higher tax.
Who this affects: Hospitality and beverage industries
What this means: According to the Chancellor, ‘the Alcohol Duty system will undergo a major simplification.’ A five-point plan has been devised to take effect in 2023. Essentially, drinks will be taxed according to their strength – the higher the abv, the higher the tax. However, in a bid to apparently support pubs — duty rates on draught beers and cider will be cut by 5%. The 28% duty on sparkling wines and Champagnes will end. The planned increase in duties on scotch, wine, cider and beer will be cancelled.
What this means: The new plan rewards pubs that serve draught beer and cider, low-strength beers, ciders and wines, while higher-abv drinks will attract a higher tax.
3
Decision: Business rate relief
Who this affects: Organisations paying for business premises
What this means: A temporary business rates relief is being introduced for eligible retail, hospitality and leisure properties for 2022-23. A reform to the business rates system is being set out for over the next 5 years.
For the next 12 months businesses pay no extra business rates and under reforms, every three years from 2023, system property valuations to the business rates system will be reviewed rather than every five years. Businesses looking to implement green infrastructure will also be benefited.
Who this affects: Organisations paying for business premises
What this means: A temporary business rates relief is being introduced for eligible retail, hospitality and leisure properties for 2022-23. A reform to the business rates system is being set out for over the next 5 years.
For the next 12 months businesses pay no extra business rates and under reforms, every three years from 2023, system property valuations to the business rates system will be reviewed rather than every five years. Businesses looking to implement green infrastructure will also be benefited.
4
Decision: 50% business rates discount
Who this affects: The retail, hospitality and leisure sectors
What this means: Eligible businesses in the above sectors will benefit from a new, one-year 50% business rate discount of up to £110,000.00 to help aid the industry’s recovery. For one-year eligible businesses can receive a 50% business rate discount.
Who this affects: The retail, hospitality and leisure sectors
What this means: Eligible businesses in the above sectors will benefit from a new, one-year 50% business rate discount of up to £110,000.00 to help aid the industry’s recovery. For one-year eligible businesses can receive a 50% business rate discount.
5
Decision: Tonnage tax system reform
Who this affects: Cruise companies, ships that lay cables to help create wind farms and scientific research vessels
What this means: From April 2022 the government is introducing measures to reform the tonnage tax regime to attract ships to register in the UK.
The Chancellor is looking to make the tonnage tax ‘simpler and more competitive.’ Global shipping companies will have a greater chance of tax breaks if they fly the red ensign – the UK’s merchant shipping flag. Ships that are working to help the UK’s net zero carbon emissions are also more likely to be accepted into the scheme.
Who this affects: Cruise companies, ships that lay cables to help create wind farms and scientific research vessels
What this means: From April 2022 the government is introducing measures to reform the tonnage tax regime to attract ships to register in the UK.
The Chancellor is looking to make the tonnage tax ‘simpler and more competitive.’ Global shipping companies will have a greater chance of tax breaks if they fly the red ensign – the UK’s merchant shipping flag. Ships that are working to help the UK’s net zero carbon emissions are also more likely to be accepted into the scheme.
6
Decision: Tax relief for cultural organisations
Who this affects: Cultural organisations such as theatres, galleries and orchestras
What this means: Tax relief worth £250 million will be made available for cultural organisations until April 2023 to aid recovery from the pandemic. For the next two years the cultural sector will benefit from tax relief to help rebuild the sector after its decline as a result of the pandemic.
help the UK’s net zero carbon emissions are also more likely to be accepted into the scheme.
Who this affects: Cultural organisations such as theatres, galleries and orchestras
What this means: Tax relief worth £250 million will be made available for cultural organisations until April 2023 to aid recovery from the pandemic. For the next two years the cultural sector will benefit from tax relief to help rebuild the sector after its decline as a result of the pandemic.
help the UK’s net zero carbon emissions are also more likely to be accepted into the scheme.
7
Decision: Funding for brownfield development and tax on developers to fund cladding
Who this affects: Property developers
What this means: £1.8billion will be used to fund 1,500 hectares of brownfield (unused or disused) land for new development and a new tax will be imposed on companies or groups undertaking UK residential property development with annual profits in excess of £25 million. £300 million will be distributed to combined authorities and councils for locally led brownfield sited and the remaining £1.5 billion is earmarked for generation under-used land and delivery transport links and community facilities.From the 1 April 2022 large residential developers will be taxed 4% in an aim to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market.
Who this affects: Property developers
What this means: £1.8billion will be used to fund 1,500 hectares of brownfield (unused or disused) land for new development and a new tax will be imposed on companies or groups undertaking UK residential property development with annual profits in excess of £25 million. £300 million will be distributed to combined authorities and councils for locally led brownfield sited and the remaining £1.5 billion is earmarked for generation under-used land and delivery transport links and community facilities.From the 1 April 2022 large residential developers will be taxed 4% in an aim to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market.
8
Decision: Research and development investment (R&D)
Who this affects: Public sector investment
What this means: From the 1 April 2023 incentives to R&D included modernising costs on data cloud computing, rules will be amended to refocus incentives for innovation in the UK and there will be no changes to the administration of the regime to make the anti-avoidance deterrent more robust.
Modernising costs will be welcomed as many in the industry feel that rules on software costs are outdated; up until now revenue costs for installed software were allowable but cloud computing and data costs were excluded. To encourage R&D spending in the UK it may mean excluding overseas R&D which may impact upon businesses with innovation overseas supply chains.
Who this affects: Public sector investment
What this means: From the 1 April 2023 incentives to R&D included modernising costs on data cloud computing, rules will be amended to refocus incentives for innovation in the UK and there will be no changes to the administration of the regime to make the anti-avoidance deterrent more robust.
Modernising costs will be welcomed as many in the industry feel that rules on software costs are outdated; up until now revenue costs for installed software were allowable but cloud computing and data costs were excluded. To encourage R&D spending in the UK it may mean excluding overseas R&D which may impact upon businesses with innovation overseas supply chains.
9
Decision: Planned rise of fuel duty cancelled
Who this affects: All businesses requiring fuel
What this means: Fuel tax will be frozen at 57.95p per litre. This is the twelfth year in a row that it has been frozen at this rate. The Chancellor is wanting to keep the cost of living low, so has continued the freeze of fuel tax for diesel, petrol, biodiesel and bioethanol at 57.95p.
Who this affects: All businesses requiring fuel
What this means: Fuel tax will be frozen at 57.95p per litre. This is the twelfth year in a row that it has been frozen at this rate. The Chancellor is wanting to keep the cost of living low, so has continued the freeze of fuel tax for diesel, petrol, biodiesel and bioethanol at 57.95p.
10
Decision: Recovery Loan Scheme Extension
Who this affects: Businesses requiring funding from the effects of the pandemic
What this means: Originally due to end 31 December 2021, the six-month extension of the recovery loan scheme now means it will end 30 June 2022. Available finance to businesses will decrease from up to a maximum of £10 million per company to £2 million and the government guarantee will be reduced from 80% to 70% to encourage the lending market to move towards normality.
Who this affects: Businesses requiring funding from the effects of the pandemic
What this means: Originally due to end 31 December 2021, the six-month extension of the recovery loan scheme now means it will end 30 June 2022. Available finance to businesses will decrease from up to a maximum of £10 million per company to £2 million and the government guarantee will be reduced from 80% to 70% to encourage the lending market to move towards normality.
Whilst the budget does offer some support to smaller businesses, if you’re not sure how the Autumn Budget or Spending Review will affect yours over the next year, please contact Hayley. She will happily chat through how the changes may directly influence your business and help you navigate your company safely through the next year.
For all your financial concerns, please don't hesitate to call Hayley today on 01473 657853.
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