Autumn Budget Statement Summary 2021
Published / Last Updated on 30/10/2021
The Chancellor, Rishi Sunak took to his feet for the Budget speech yesterday knowing that government revenue was much higher than expected as the UK economy raced out of the blocks after covid-19 lockdown.
Therefore, a very upbeat speech concentrating on spending rather than increasing taxes with a quick summary below of the ‘spin’ that the cynics here did not ‘swallow’.
- Government support of £378 billion to protect 12 million jobs.
- The Chancellor has written to the Governor of the Bank of England confirming the government’s continued target of 2%pa inflation. All smoke in our opinion.
- Economic growth to be faster than expected; 6.5% this year, 6.0% in 2022 but then slowing to 2.1% in 2023, and 1.3% in 2024.
- The UK’s first two ‘Green Gilt’ issues raised £26.1 billion i.e. borrowing to invest in green infrastructure projects combined with the launch of the first NS&I Green Savings Bond, a 3-year fixed term at 0.65%.
- 50% business rates relief will apply to retail, hospitality and leisure businesses.
- A new ‘business rates improvement relief’ that postpones business rate reviews for 12 months after any building renovations.
- Affordable Homes Programme with An £11.5 billion of government money to build 180,000 affordable houses (barely scratching the surface).
- Pension top up scheme where low earners (below the personal allowance) who are members of a net pay pension scheme will receive a credit for missed tax relief on pension contributions.
- Universal Credit taper rate reduced from 63% to 55% meaning those that work but also on universal credit will increase their net retained income.
- Government to invest in more R&D and innovation to deliver a high-wage, high-skilled, high productivity economy plus additional funding for an Apprenticeships and Lifetime Skills Guarantee including a new ‘Multiply’ programme to improve adult numeracy skills.
All good and “hear, hear” rang around the House of Commons but never forget the tax rises have already been announced throughout 2021:
- Our main tax allowances etc for Income Tax, Capital Gains Tax and Inheritance Tax have been frozen until April 2026.
- Pensions Lifetime Allowance and Annual Allowance also frozen until 2025/26.
- A Health and Social Care Levy: a temporary 1.25%pa levy on national insurance contributions (NIC) for the self employed, employer NIC, employer NIC and dividends for shareholders.
- Even pensioners that no longer pay NIC will pay the 1.25% levy.
- Full Corporation Tax Rate rising to 25% from 1st April 2023 but many small and medium sized businesses, it will be 26.5% on profits over £50,000.
- Further ‘hits’ are expected for inheritance tax and capital gains tax, in particular for wealth and 2nd/additional property ownership.