Last Wednesday (27th Oct) Rishi Sunak, the Chancellor of the Exchequer, delivered the Autumn Budget. From confirming the increase in the National Living Wage to announcing business rates discounts for certain industries, here's what has changed, and what has stayed the same in the Autumn Budget.
Rishi Sunak delivered the Autumn Budget last week, in an hour-long speech that announced the key decisions that the Government will be taking going forward. The Budget had been highly anticipated and announced several changes, whilst still keeping in mind that Coronavirus continues to have a big impact on the UK economy and public. If you'd like to read the full Budget report on the Government's website report you can do so here, or read on for our summary below.
The Chancellor said: "Today’s Budget does not draw a line under Covid; we have challenging months ahead. But today’s Budget does begin the work of preparing for a new economy post-Covid.
The Prime Minister’s economy of higher wages, higher skills, and rising productivity, of strong public services, vibrant communities, and safer streets. An economy fit for a new age of optimism."
The Budget announced several changes, including significant extra spending on public services. But it was also remarkable for what didn't change. Despite speculation on potential tax rises, many areas remained unaffected, such as pensions, ISAs, and income tax. We've put together an overview below.
What has changed?
The Autumn Budget announced many changes that will impact businesses and individuals alike. Some of the biggest changes included an increase in the National Living Wage by 6.6%, an end to the public sector pay freeze, and an £11.5bn fund to build up to 180,000 affordable homes.
It was also announced that the planned rise to fuel duty was cancelled, alcohol duties will be drastically simplified, the Universal Credit taper will be reduced by 8%, and that hundreds of millions of pounds will go towards supporting families and youths to thrive, through “A Start for Life” parenting programmes, new youth facilities, and family hubs.
For businesses, some of the biggest announcements included a 50% business rates reduction for one year for the retail, hospitality, and leisure sectors. Eligible businesses will be able to claim a discount on their bills of up to a maximum of £110,000.
A ‘business rates improvement relief’ was also announced, to encourage businesses to adopt green technologies like solar panels. This will mean that from 2023, every single business will be able to make property improvements – and, for 12 months, pay no extra business rates.
Other announcements in the Budget included funding to support the removal of cladding, and cuts to air passenger duty for flights within the UK.
What has stayed the same?
There were many areas that remained unchanged in the Autumn Budget. Feared changes to Pensions, ISAs, Capital Gains Tax and Inheritance Tax failed to materialise, as did any change to income tax, Venture Capital Trusts, and Enterprise Investment Schemes.
A VAT cut on energy bills, which have been drastically increasing this year, was rumoured to be announced, however, this was not included in the Budget. Support for the self-employed was also absent, despite hopes that more would be put into place to support those that work for themselves.
How will the Budget affect my own financial planning?
In the absence of any significant changes to tax rates or allowances, there is little direct impact on most people's financial plans. The impact is more insidious, in that the various allowances that might otherwise be raised in line with inflation were frozen, meaning that the Government's tax take is likely to rise in future years.
A good example is Inheritance Tax, the receipts for which just keep going up. Between April and July 2021 the Government benefited from an extra £0.5 billion compared to the previous year, and with no movement in the exempt allowances this figure looks set to rise further as the value of people's estates continue to grow. Good planning can reduce much of the tax burden for individuals, and it's certainly worth talking to your financial planner to see what can be done.
If you're in business there are likely to be other Budget changes that affect you, depending on the sector you're in and the nature of your workforce. Our Accountancy team will be pleased to give you advice tailored to your own situation.
Our team of experts are on top of the Autumn Budget changes and can answer any questions you have relating to how they might impact you. Why not drop us an email with your query?
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