Yesterday afternoon, Chancellor Rishi Sunak delivered the 2021 Autumn Budget and Spending Review, outlining the government’s spending plans for the next three financial years. We understand you may wonder how the changes announced in the budget will affect your business, so we’ve outlined three key factors that could make an impact.
Taxation
National Insurance
As previously announced in September, the Chancellor highlighted the 1.25% increase in national insurance contributions and dividends from April 2022, in a bid to help fund health and social care costs. However, from April 2023, the NIC increase will then be withdrawn and become a standalone tax, which will then appear as a separate line on employee payslips. You can read more about these changes here.
Business Rates
As a result of Covid-19’s impact on shops, restaurants, bars and gyms, a temporary 50% discount on their business rates was announced, up to a maximum of £110,000. In addition to this, the Chancellor also announced that 2022’s planned annual increase in rates for all firms would be scrapped for the second year in a row.
Income Tax
Income tax limits and personal allowance will remain at their current level until April 2026. However, wage earners receiving annual pay increases up to April 2026 will be required to pay tax on the full value of any increases. This is because, with personal allowances and the higher rate thresholds frozen until April 2026, any increases in earnings will be taxed and may even push some into higher rate tax bands.
Corporation Tax
The main rate of corporation tax will remain at 19% until April 2023, and will then increase to 25%, with a small profits rate of 19% on profits up to £50,000
R&D tax reliefs are also set to be reformed in an effort to boost innovation, and support the technological advances in the UK. The chancellor has also announced he will expand qualifying expenditure to cover data purchases and cloud computing costs. These changes will be legislated for in Finance Bill 2022-23, and take effect from April 2023.
National Minimum Wage
While increases to the National Minimum and Living wage were announced already by the treasury on the 25th, the Chancellor officially announced these changes yesterday. Effective from the 1st April 2022, the changes to the National Minimum Wage are as follows:
| Year | 23 and over | 21 to 22 | 18 to 20 | Under 18 | Apprentices |
| April 2021 | £8.91 | £8.36 | £6.56 | £4.62 | £4.30 |
| April 2022 | £9.50 | £9.18 | £6.83 | £4.81 | £4.81 |
| Increase | 59p | 82p | 27p | 19p | 51p |
Housing
A multi-year investment of nearly £24 billion for housing was announced by the Chancellor, this figure includes:
- £11.5bn towards the Affordable Homes Programme to build 180,000 homes
- £5bn to remove unsafe cladding, supported by £2bn from the residential property developer tax
- £640m to tackle rough sleeping and homelessness
- £950m for the home upgrade grant
- £65m on new software to ‘digitise’ the planning system
If you have any queries, or would like to discuss how the budget may affect your business, then please contact us and one of our friendly experts will be in touch.
Source: gov.uk/government
