Sunak’s Budget promises a stronger economy for British People

The Chancellor of the Exchequer, Rishi Sunak, proceeded to announce the details of the 2021 Autumn Budget earlier this afternoon (27 October) providing his plans for creating a strong post-COVID economy.

This year's Autumn Budget is unusual for two reasons:  It's the second of the year - there was a Budget earlier this year in the Spring - it also is on the same day as the results of the government’s spending review, detailing how it will fund public services for the next three years.

Sunak stated: "Employment is up, investment is growing, public services are improving, public finances are stabilising, and wages are rising."

Sharon Bedford, Business Tax Partner comments that: “Sunak declared he wanted to support business and announced amongst other things a welcome cut in business rates. Many businesses are however facing significant increases to their wage bill due to the increases in minimum wage and the effective hike in employers’ national insurance of 1.25% in April 2022. Companies will also have to pay increased corporation tax when the rate rises from 19% to 25% in April 2023.”  

Ian Miles, Private Client Tax Partner adds: “With no changes to capital gains tax or inheritance tax, the current tax planning opportunities remain available and attractive for many entrepreneurs. For those who are currently paying capital gains taxes at 10% or 20% and have succession planning opportunities, this will come as a great relief.”

The chancellor said it will be "an economy fit for a new age of optimism,” with stronger finances and a stronger economy for the British People.

Winners

• Working Families - “A society that rewards work” as Universal Credit taper is cut by 8% (63% to 55%), meaning a pay rise for more than 2 million working people, which will be introduced no later than 1 December.
• Drivers - Fuel Duties frozen - Planned Rise in fuel cancelled amid the highest pump prices in eight years
• Drinkers - A planned rise in the duty on spirits, wine, cider and beer will be cancelled. Additionally, Alcohol Duties will be streamlined so the stronger the drink the higher the rate, but… not until 2023.
• Hospitality, Retail & Leisure - Help for high streets and small business, as hospitality gets 50% rates discount.
• Short-Haul fliers – Duty on UK domestic flights will be halved from 2023.
• Public Sector Workers - Chancellor confirmed pay rises for around five million public sector workers, following the freeze in pay announced during the pandemic.
• The lower-paid – The National Living Wage (also known as the minimum wage) will rise to £9.50 an hour for over 23-year-olds, an increase of 6.6%, benefiting around 2.5 million people.
• Companies undertaking research and development - £22bn a year investment on R&D, by 2026-27, an increase of 50% - the fastest increase ever from .07% to 1.1% of GDP, more than anywhere else in the world.
• Schools – an extra £4.7bn by 2024-25. Nearly £2bn of new funding to help schools and colleges to recover from the pandemic and schools funding to return to 2010 levels in real terms - an equivalent per pupil cash increase of more than £1,500.

Losers

• Long-Haul Flights - Extra passenger duty on long haul flights. A new rate of air passenger duty got journeys of more than 5,500 miles of £91.
• Cladding Victims – The Government confirmed that it would charge a 4pc levy on building developers' profits to fund cladding remediation, but no new funding was announced.
• Smokers – increase on the duty rate on all tobacco products by the Tobacco Duty escalator of 2% above RPI by 6pm tonight.

 

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