We have put this post together as an easy way to digest the headline announcements in the Autumn 2021 Budget and Spending Review and how the changes may effect you as a small business owner.
We have put this post together as an easy way to digest the headline announcements in this week's Autumn 2021 Budget and Spending Review. We haven't covered everything, just the changes that may effect you as a small business owner. Instead of grouping the headlines together we've separated them out and listed them alphabetically.
Unfortunately there isn't any significant, additional support for small businesses or the self-employed because the main focus, as expected, is on stabilisation and recovery of the economy from the COVID-19 pandemic.
The impact of the new IR35 rules on freelancers and the self-employed were not mentioned at all which is disappointing, particularly when we need entrepreneurs more than ever to help with country’s economic recovery.
The expected increase in inflation to 4% in 2022 also remains a threat to economic recovery.
-Simplification of the duty system by reducing the number of main rates from 15 to 6
-Duty rates on draught beer and cider will be cut by 5%, taking 3p off a pint
-All products will be taxed in proportion to their alcohol content
-New rates for low strength drinks below 3.5% ABV
-A new small producer relief for cidermakers and other producers of drinks lower than 8.5% ABV
-Funding of £150m over 3 years from the British Business Bank to help the development of regional networks of angel investors outside of London and encourage early-stage equity finance for smaller businesses
Annual Investment Allowance (AIA)
-The government is extending the temporary £1 million level of the Annual Investment Allowance to 31 March 2023, encouraging businesses to bring forward investment
-Simpler tax for any business investing between £200,000 and £1 million
-Extension of the £3,000 apprentice hiring incentive for employers until 31 January 2022
-A new recruitment service will be launched by May 2022 to help SMEs hire new apprentices
-The National Living Wage for Apprentices will increase from £4.30 to £4.81 per hour
-A one-year 50% discount on business rates for retail, hospitality and leisure businesses in England, up to a maximum of £110,000. This includes pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms
-Business rates revaluations will now happen every three years, instead of five, with the first new revaluation starting in 2023
-From 2023, businesses making property improvements will pay no extra business rates for 12 months, because of a new ‘business rates improvement relief’
-New relief to support green technologies. Until 2035, plant and machinery used onsite for renewable energy will be exempt from business rates
Capital Gains Tax
-The capital gains tax (CGT) annual exempt amount of £12,300 will be frozen until 2026, as previously announced
-Basic-rate taxpayers will continue to pay 10% on capital gains above this amount, while higher-rate taxpayers pay 20%
For advice on Corporation Tax speak to our accounting partners.
-As previously announced, Corporation Tax will increase from 19% to 25% from April 2023 if a company's profits are over £250,000
-For companies with profits of up to £50,000 the tax will remain at 19%. There will be a gradual increase up to the main rate of 25% when profits reach £250,000
For advice on Corporation Tax speak to our accounting partners.
-Income tax to be paid on income from dividends will increase by 1.25% and will take effect from 6th April 2022
-The ordinary rate will increase to 8.75%
-The upper rate will increase to 33.75%
-The additional rate will increase to 39.35%
-The trust rate will increase to 39.35%
See Recovery Loan Scheme, Start Up Loans and Angel Investors
-£1.4 billion Global Britain Investment Fund to encourage investment in the UK’s life sciences, offshore wind and automotive manufacturing sectors
-£1.6 billion for the British Business Bank’s regional funds providing debt and equity finance to SMEs. Regional funds in Scotland (£150m), Wales (£130m) and Northern Ireland (£70m).
-£660m for the Northern Powerhouse Investment Fund including an expansion into the North East of England, £400m for the Midlands Engine Investment Fund and £200m for a new fund in the South West of England
Health and Social Care Levy
-As previously announced, the new Health and Social Care Levy will be introduced from April 2022
-The 1.25% Levy will apply to Class 1 (Employee, Employer) and Class 4 (Self Employed) National Insurance contributions (NICs), and to the main and additional rates
-The Levy will not apply to Class 2 NICs or Class 3 NICs
Local Council Funding
-Local Councils will be provided with £4.8bn of new grant funding which, apparently, is the largest annual increase in local government core funding in over a decade
National Living Wage and National Minimum Wage
-There will be an increase of the National Living Wage 23+ year olds from £8.91 to £9.50 per hour
-There will be increases of the National Minimum Wage across these age categories:
21 to 22 year olds from £8.36 to £9.18 per hour
18 to 20 year olds from £6.56 to £6.83 per hour
16 to 17 year olds from £4.62 to £4.81 per hour
Apprentices from £4.30 to £4.81 per hour
-No announcement was made about other age groups for the National Minimum Wage
Pensions and savings
-The maximum contribution you can make tax-free to a personal pension will remain at £40,000 each tax year
-The band of savings income that is subject to the 0% starting tax rate will remain at its current level of £5,000 for 2022/23
-The annual subscription limit for Individual Savings Accounts (ISAs) are not being changed in 2022/23 and remain at £20,000 for Adults; and £9,000 for Juniors and users of a Child Trust Fund
Recovery Loan Scheme
-The Business Recovery Loan Scheme is being extended to 30th June 2022
-Finance up to a maximum of £2 million per small and medium-sized businesses is available to assist recovery from the impact of the COVID-19 pandemic and to grow
-The government guarantee will be reduced from 80% to 70%
Find out more about the Recovery Loan Scheme.
Research & Development Tax Relief and Innovation
-R&D tax relief will now include data and cloud computing costs
-The Government is reforming the R&D tax relief system and is refocusing the reliefs towards innovation in the UK (historically, companies have been able to claim for activity taking place overseas)
-By 2024/25, there will be an increase in funding for core Innovate UK programmes to around £1bn per year
Find out more about R&D Tax Relief from our partners Access2Funding.
Shared Prosperity Fund
-Launch of the UK Shared Prosperity Fund (UKSPF), which replaces business funding the UK used to receive due to being part of the EU
-£2.6bn over the next three years, rising to £1.5 billion a year by 2024-25
-A new UK Global Talent Network will be launched to work with businesses and research institutes to identify and attract global talent in key science and tech sectors
-Confirmation of the new Scale-Up Visa, which launches in Spring 2022, to make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals
Start Up Loans
-Extension of the Start Up Loans scheme for an additional 33,000 Start Up Loans over the next three years, to April 2025.
To find out more about Start Up Loans visit Transmit Startups.
-A taper rate reduction from 63% to 55%, meaning Universal Credit claimants will be able to keep an additional 8p for every £1 of net income they earn
-The amount that households can earn (‘Work Allowance’) before Universal Credit begins to reduce is now increased by £500 a year
For a full breakdown of the Autumn Budget & Spending Review visit the Gov.UK site.
Main image by Remy Baudouin.