Late last month, we listened to the Chancellor’s Budget speech, waiting to see if some of our Autumn Budget 2021 predictions would come true.
To our surprise, the Autumn Budget veered from our expectations quite greatly. No significant tax changes, a large amount of investment and relatively few green policies.
So, what were the key announcements? Read on for our Autumn Budget 2021 summary.
Business rates reform
One key announcement Chancellor Rishi Sunak made was a draft of reforms to business rates in England as part of his long-awaited business rates review after reports suggested the tax threatened businesses with closure.
The Chancellor announced the business rates multiplier would be frozen for 2022/23, saving businesses in England £4.6 billion over the next five years, according to the Treasury.
Meanwhile, business rates revaluations will occur more frequently – every three years, rather than every five – so the rates businesses pay are fairer and more accurate.
Sunak also said rates would be cut by 50% for eligible retail, hospitality and leisure businesses in 2022/23, up to a cap of £110,000.
During the pandemic, businesses in the trades enjoyed a business rates holiday, which started tapering off from 30 June 2021. The taper means they pay only 33% of their bill until 31 March 2022, at which point the 50% rate will kick in.
Recovery loan scheme deadline extension
Although it wasn’t in the Chancellor’s Budget speech, the recovery loan scheme (RLS) has been extended as part of the Autumn Budget.
Introduced in the Spring Budget 2021 to replace coronavirus loan schemes, such as the business interruption loans, the RLS was originally due to end on 31 December 2021.
Until this date, businesses can borrow between £25,001 and £10 million from certain lenders for up to three years, but at the turn of the year, only SMEs will be able to borrow a maximum of £2m.
This offer will be available until 30 June 2022.
National living wage increases to £9.50
In some good news for individuals on the national living wage, the minimum rate of hourly pay for over-23s will increase from £8.91 to £9.50 an hour.
However, despite its name, the national living wage does not always match the average cost of living in the UK, although it does now match the Resolution Foundation and Living Wage Foundation’s estimates.
Those on the national living wage who reside in London might still feel a pinch, however, given that the London rate of living is £10.85 an hour.
Businesses will have to take the new living wage into account when working out their overheads. After all, as Jane Gratton, head of people policy at the British Chambers of Commerce said:
“There is a limit to how much more firms can continue to absorb rising costs before they have to raise their own prices adding to inflationary pressures.”
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