Posted 3rd November 2021
Chancellor Rishi Sunak delivered a Budget to ensure the UK economy bounces back following the coronavirus pandemic.
Here is a summary of the main points:
He announced that total departmental spending with increase by £150 billion each year in cash terms by 2024/25, making this the largest real term increase in overall departmental spending for any Parliament this century.
National living wage: it was confirmed the hourly rate will increase from £8.91 to £9.50 per hour from April 2022.
Changes to R&D tax relief: it was announced that R&D tax relief will be reformed from April 2023 to support modern research methods, by expanding qualifying expenditure to include data and cloud costs, and to give tax relief on innovation carried out in the UK. HMRC will continue to target abuse of this tax relief and improve compliance.
In its report prepared for the Budget, the Office for Budget Responsibility (OBR) altered its predication for economic growth in 2021 to 6.5% – a significant rise when compared to its previous forecast of 4%.
Fuel and alcohol duty: significant changes to these were announced – Fuel duty will be frozen at 57.95p per litre for 2022/23, and drinks will be taxed in proportion to their alcohol content, making the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes.’
The government will give £11.5 billion to help build up to 180,000 affordable homes, whilst an additional £4.7 billion will be invested in the core schools budget in England.
Announcing the allocation of the first round of the Levelling Up Fund, the Chancellor committed £1.7 billion to investment in local areas, whilst the UK Shared Prosperity Fund will provide £2.6 billion to help people get into jobs and get on with life.
Business rates also saw changes: the Chancellor unveiled a new temporary business rates relief in England for 2022/23 for eligible retail, hospitality and leisure properties, worth almost £1.7 billion. The government stated the reform of business rates will make the system fairer, more responsive and more supportive of investment.
More time to report and pay CGT on residential property disposal: The government has taken on board the Office of Tax Simplification recommendation that the 30 day reporting and payment deadline should be increased to 60 days, this applies to all property disposals on or after 27 October 2021.
‘Temporary’ £1 million annual investment allowance extended: business investing in plant and machinery will welcome another extension in the 100% Annual Investment Allowance until 31 March 2023. The 100% relief was scheduled to revert to £200,000 on 1 January 2022. This deduction is available to unincorporated business as well as limited companies and the equipment does not have to be new.
Please contact us of you would like to discuss any of the above.