Autumn Budget 2021 – Summary for business

Chancellor Rishi Sunak delivered his Autumn Budget statement with many tax increases already announced – with eye catching increases to National Insurance from April 2022 to fund the increasing cost of social care and a Corporation Tax increase which takes effect from April 2023.

It was therefore good news that no further major tax increases were announced.

The Chancellor acknowledged that the tax burden is at a historically high level, and that he hopes he can reverse some of the increases or announce other tax cuts – surprisingly which would be before the next election.

We have digested the Budget information and summarised the key points for business below:

Corporation Tax – As previously announced the current rate of 19% will increase to a main rate of 25% from 1 April 2023.  The 25% rate will apply to companies with profits above £250,000.  Companies with profits up to £50,000 will be taxed 19%.  Companies with profits between £50,000 and £250,000 will pay a rate which gradually increases from 19% up to 25% (A marginal rate of 26.5%).

Research & Development (R&D) tax relief – The relief will be expanded by increasing the types of qualifying expenditure to include data and cloud costs.

Annual Investment Allowance (AIA) – The AIA is the amount a business can spend in a year on qualifying plant and machinery that qualifies for 100% tax relief in the year of purchase.  It was announced in the Budget that the current rate of £1m will be extended until 31 March 2023.  After this date it will reduce to £200,000.

Super Deduction – The Super Deduction which applies to Companies only, is an enhanced capital allowance which increases the relief on qualifying plant and machinery from 100% to 130%.  It was announced this relief will be extended to 31 March 2023.

Business Rates discount– Retail, Hospitality and Leisure sector business rates will be reduced by 50% for the 2022/2023 tax year maximum £110,000.  Currently there is relief available in these sectors for a two-thirds reduction for the 2021/2022 tax year.

The five-yearly cycle of revaluing properties will change to a three-yearly cycle with effect from 2023.

The business rates multiplier for the 2022/2023 tax year has been frozen.

Business Rates Improvement Relief – From 2023 a 12 month rate holiday will be introduced on property improvements.  Those businesses which make property improvements will pay no extra business rates for 12 months.

National Minimum Wage (NMW) – it was announced prior to the Budget that the NMW would increase as follows:

Rate from April 2022Current rateIncrease
National Living Wage£9.50£8.916.6%
21-22 Year Old Rate£9.18£8.369.8%
18-20 Year Old Rate£6.83£6.564.1%
16-17 Year Old Rate£4.81£4.624.1%
Apprentice Rate£4.81£4.3011.9%

You can download our full budget report here – Autumn Budget 2021.

If you have any questions regarding the Budget and how it impacts on you or your business then please get in touch on 01228 904 904.

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