The autumn budget was always going to focus on economic recovery, with Brexit and the Coronavirus pandemic in the background.
With inflation hitting 3.1% in September and predicted to reach 4% over the next year per the Office for Budget Responsibility (OBR), many people and businesses are concerned about factors such as higher energy costs.
Sunak's raft of measures on 27th October offers some good news, with potential reductions in business rates and 50% discounts for critical sectors - but the possible online sales tax won't be welcome for online companies.
Today the SAS Accounting team runs through the most significant changes and how they might impact your finances.
Changes to Taxes and Income
Some of the big business announcements include:
- Discounted business rates of 50% for companies operating in retail, hospitality and leisure, throughout 2022-23, to a cap of £110,000.
- Confirmation that business rates will continue but be subject to reforms - this is likely to be linked in with a potential online sales tax and revised to reduce costs to firms with bricks and mortar premises, paid for by levies against online-only businesses.
- Fuel duty increases have been scrapped, primarily due to the panic-buying and transport issues that led to prices at the pump rising to their highest in eight years.
The online sales tax isn't yet set in stone, but it's been under debate for some time in an attempt to make the trading landscape fairer for shops on the high street.
Currently, the government hasn't confirmed that it will announce an online sales tax, but the budget included a commitment to further consultation on the concept.
National Living Wage will also rise by 6.6% to £9.50 an hour from April 2022.
We've heard about the increase of 1.25% on National Insurance, changing to a new health and social care tax from April 2023 - but there is some relief here for employers that the extra staffing costs will impact.
Some National Insurance income thresholds will rise in line with inflation by 3.1%, meaning wages subject to National Insurance contributions may decrease.
International Travel Duties
After a year when international travel became significantly more complex, the following announcement looks at air travel, both domestically and further afield.
Flights booked between UK airports will now attract a lower Air Passenger Duty rate from April 2023.
That will be great news for people who regularly travel for leisure or business, with the charge dropping from £13 to £6.50.
However, the news isn't so beneficial for long-haul travel since a new ultra long haul duty band for flights over 5,500 miles will make it more expensive to travel outside of the UK.
The government confirmed that it would continue to provide financial support to English airports for an additional six months to assist with the sector's recovery.
Property and Housing Announcements
Next, we'll look at housing, with several new spending targets that will impact property developers, investors and landlords.
- A budget of £24 billion has been set aside to meet housing demand, including an £11.5 billion allocation to develop up to 180,000 affordable homes.
- The government will target brownfield sites for new developments, utilising empty or redundant space rather than permitting more developments on green land.
- Property developers earning over £25 million in profit will be subject to an additional 4% tax levy. The funds raised are channelled into initiatives to remove and replace unsafe cladding, expected to cost £5 billion.
Capital Gains Tax reporting deadlines have been extended from 30 days to 60, meaning that individuals or businesses that sell a UK property have an additional month to declare their gain and pay the associated tax.
This tax is usually payable on sales of second homes or buy-to-let rental investments since homeowners selling a primary residence typically are entitled to private residence relief.
Key Takeaways from the Autumn 2021 Budget
Several of the announcements delivered relate to upcoming legislation or draft bills that haven't yet come into effect, so we'll likely learn about more changes at the start of the next tax year.
For example, a new tax regime to make the UK more attractive to asset holding companies will contain amendments to corporation tax rules.
Still, we won't know all the details until the legislation is drafted to demonstrate how this new tax regime will work.
In the meantime, we've covered here some of the most significant announcements and are always available to provide tailored advice about specific changes that will affect your business.
Please get in touch with the SAS Accounting team for more information about any of the budget news covered here or to analyse how other changes might affect your sector.