Today, Rishi Sunak has unveiled the latest budget to MPs in the House of Commons, which includes the government’s latest plans on taxation and spending policies. This is the second budget of the year, following on from the previous March statement, illustrating the ever-changing environment and quick responses the government has needed to make to help manage the impact of the Coronavirus pandemic on the UK. Some of the content regarding National Living Wage increases and increases in funding for public services have emerged over the last couple of days, however today, the Chancellor has unveiled further details, of which a summary of the key points has been included below.
Key points for businesses
An increase in the National Living Wage from April ensures that the lowest paid will continue to receive pay rises. The National Living Wage will rise to £9.50 from £8.91 for over 23s from April 2022.
It was already announced in March that businesses will continue to pay Corporation Tax at a rate of 19% until April 2023. From this date, businesses whose profits exceed £50,000 will pay a new Corporation Tax rate of up to 25%, dependent on profit levels. Only businesses whose profits exceed £250,000 will pay the full 25% rate.
- Annual investment allowance and super-deduction
UK businesses that invest in plant and machinery will benefit from the increased Annual Investment Allowance of £1million being extended until March 2023, rather than ending in December as was previously the case. This is in addition to the super-deduction announced in March, where for two years from 1 April 2021 until 31 March 2023, companies that invest in new equipment will be able to reduce their tax bill by 130% of the cost.
Businesses in the retail, hospitality and leisure sectors will receive a 50% discount on business rates for 2022/23. This is on top of the existing Small Business Rates Relief, meaning that 90% of all retail, hospitality and leisure businesses will receive a discount of at least 50%. The government have also freezed the business rates multiplier for 2022/23 and is introducing a valuation cycle so that properties are valued every three years from 2023.
- National insurance increases
As announced in September, from April 2022, employers and employees will both see a 1.25% increase in national insurance rates. This will be used for a reform of social care in the UK and has been branded as the ‘Health & Social Care Levy’.
Key points for individuals
The Universal Credit taper rate will be cut from 63% to 55% no later than 1 December 2021. The temporary Universal Credit uplift of £20 per week ended at the end of September 2021.
There were no significant announcement on these, but just to reiterate the March announcement, in April 2022, the personal allowance will increase to £12,570 and the higher rate tax threshold will increase to £50,270. These thresholds will then be maintained at the same level until 2026.
Other key points
The rate of inflation recorded in September was 3.1%, which is likely to rise to 4% over the next year. The latest measures of wage growth show an increase of 3.4% in real terms since February 2020.
The government have committed to increasing spending on Whitehall departments over the course of this parliament by £150billion. Schools will receive an extra £4.7billion by 2024-25, with £2billion of this being to help schools and colleges recover from the Coronavirus pandemic.
The system for alcohol duty is being overhauled and simplified with there now being six various rates, compared to the current five. This will be based on the strength of the alcohol content. The planned overall increase in duty has been cancelled, with draught beer and cider actually receiving a cut of 5% on their duty rate.
Get in touch
The 2021 budget has seen many extensions to existing policies and schemes, in addition to the inception of new ones. If you have any questions regarding the details in the Chancellor’s budget, please call the office on 01392 241228 or email Misty at email@example.com.