Autumn Budget 2021

With Government having already announced two of the biggest impacts, the increase in National Insurance from April 2022, transitioning to the introduction of the Health and Social Care Levy from April 2023, plus the hike in National Minimum Wage rates from April 2022, it is difficult to get excited about much else.

The increase in the minimum wage from £8.91 an hour to £9.50 whilst great news for employees is an additional cost to businesses who may already be struggling with rising costs and tax increases.

There were however welcome extensions to a number of reliefs, such as the continued extension of the Annual Investment Allowance, and extension of business rates cut for the hospitality and retail sector.

The Chancellor had previously announced measures to increase corporation tax along with a super-deduction for capital allowances. There were however some headline-grabbing changes:-

• The Annual Investment Allowance of £1m has been extended to 2023.
• R&D tax relief to include cloud computing and data costs, but no longer to include overseas activities.
• Business Rates reforms to include a new relief for improvements together with a welcome 50% reduction for the retail, leisure and hospitality sectors.
• Property developers will incur a new 4% levy on profits above 25m to fund the removal of unsafe cladding.
• Consultation on an online sales tax.
• National Living Wage to increase next year by 6.6%, to £9.50 an hour.
• Tax relief for museums and galleries will be extended for two years, to March 2024.
• The Universal Credit taper rate will be reduced by 8% to 55% by no later than 1 December.
• The reform of Alcohol Duty, to be based on the strength of the drink in future.

Many of the impacts for business will be felt from April 2023 when corporation tax increases and the AIA is withdrawn. The aim of low taxes will be determined by the UK’s economic performance of the next few years.

For any employers not already doing so, we would recommend looking at the benefits from tax-planning opportunities, such as:

• Salary sacrifice for pension arrangement – reducing National Insurance (and Social Care Levy) liabilities for employers and employees
• Company cars – swapping to fully electric cars, if practical to do so, as the benefit charge is minimal, 2%
• Electric car salary sacrifice – providing employees the opportunity to obtain a company car via salary sacrifice. This could bring significant tax and National Insurance savings for staff who want an electric car, as well as for the employer. Find out more in our brochure here.
• Efficient benefits – considering use of benefits that derive savings either from tax or employer purchasing power, as an alternative to pay increases.

As always, if you do wish to discuss any tax planning opportunities, do get in touch to speak to our tax experts.

Read the full Autumn Budget summary here.