Chancellor Rishi Sunak recently delivered his second Budget speech of 2021, after the coronavirus pandemic saw a 9.9% drop in GDP and an extra £413 billion in Government spending.
We had expected Sunak to raise taxes, such as council tax and capital gains tax, to recapture some of the extra money pumped into the economy, but that wasn’t the case.
Instead, we saw announcements like cuts to alcohol and air passenger duty, and tax relief for cargo ships that fly the red ensign flag appear in the newspapers.
But what did the Autumn Budget 2021 include that individuals and businesses absolutely need to know about?
Business rates reform
A key announcement Sunak made was his long-awaited review on business rates, which had been threatening four out of five retailers with closure, according to the British Retail Consortium.
Significantly for businesses that feel their business rates are unfair because of the five year revaluation rule, revaluations are now due to take place every three years.
Additionally, the business rate multiplier will be frozen for 2022/23, saving businesses in England a total of £4.6bn over the next five years, according to figures from the Treasury.
Eligible retail, hospitality and leisure businesses will also be entitled to a 50% cut to the rates they pay, Sunak announced – up to a cap of £110,000, as they continue on the road to recovery after the pandemic.
Capital gains tax reporting deadline
Although they didn’t make it into the Chancellor’s actual speech, changes were also made to the tax reporting deadline for additional property sales as part of Autumn Budget 2021.
Buy-to-let landlords and second homeowners now have twice the amount of time to report and pay capital gains tax after they sell a residential property in the UK – 60 days, rather than the original 30 days.
The change came into immediate effect after Sunak’s speech on 27 October 2021 and applies to transactions completed on or after that date.
The extension also applies to non-UK residents disposing of any type of property in the UK, whether they own it directly or not.
Note that when you dispose of mixed-use property, the 60-day payment window only applies to the residential element of the property gain.
National living wage
As confirmed by Sunak’s speech, the national living wage will increase from £8.91 an hour to £9.50 – an increase of 6.6%.
While this will be welcome news to those on the national living wage (over-23s making minimum wage), they should know that it’s just short of the UK real living wage of £9.90 and significantly below the real living wage for London, which is currently £11.05.
Businesses, meanwhile, will have to take the extra cost of labour into account for their day-to-day operations, while pay rises without increased productivity threatens to push up inflation.
Indeed, as Jane Gratton of the British Chambers of Commerce said:
“There is a limit to how much more firms can continue to absorb rising costs before they have to raise their own prices adding to inflationary pressures.
“The best way to sustainably increase wages is to help firms boost their skills and productivity.”
Recovery loan scheme
Another key change that didn’t make it into Sunak’s speech but nevertheless formed part of Autumn Budget 2021 was the recovery loan scheme, which replaced other COVID-19 loan schemes in April 2021.
Currently set to end on 31 December 2021, the deadline for the scheme is now 30 June 2022.
However, what your business can get from it depends on when you apply.
If you apply for a recovery loan before the turn of the year, you can claim between £25,001 and £10 million. But, if you claim yours from January onwards, a maximum of £2m will be available to you, and only if you own a small business.
Regardless of when you apply, you’ll be liable for the loans and face an upper limit on interest rates of 14.99%.
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