Autumn Budget 2021 at a glance

27th October 2021

Autumn Budget 2021 announcements made on 27 October 2021.

You can download the full summary and tax tables here:

Full Budget summary (pdf)
Tax Tables 2022/23.(pdf)

You can also watch our Post-Budget Webinar on YouTube.

Rishi Sunak's second Budget this year strikes an upbeat and optimistic tone, focussing on levelling up and building a stronger UK economy with stable public finances as the country recovers from COVID-19, and battles with supply chain shortages, worries of inflation hitting 5% and possible interest rate hikes.

We already know about the hourly increase in the National Living Wage from £8.91 to £9.50 and the 1.25% tax hike in National Insurance and dividends tax from April next year.

Substantial amounts of revenue over the next five years will be raised from previously announced measures, such as the freezing of tax allowances, the rise in corporation tax and the introduction of the Health and Social Care Levy.

And despite the Treasury colander of pre-Budget leaks straining the patience of The Speaker of the House of Commons and leaving us wondering if there was anything left to announce. No Problem. Rishi has dished up some surprises on extra investment in UK infrastructure and tax cuts.

He also published a new Charter for Budget Responsibility to bind spending to a path of discipline & responsibility. Fitting within this are Budget increases for government departments of £150bn. Every department will see a real terms rise in overall spending.

The Chancellor says he wants the UK to be a Science Superpower with an increase in core science funding of £1.1bn, fully funding Horizon Europe, increasing Innovate UK’s budget, and funding £800m for ARIA and £1.7bn for Net Zero R&D.

R&D tax relief is expanded to include cloud computing and data costs within eligible spend. However, from April 2023 tax relief will only be available on activity based in the UK, which will impact on those companies that use overseas subcontractors and globally mobile workers to help with the R&D activities.

It is disappointing that the Chancellor did not go further with R&D relief, particularly with regards to the green sector ahead of COP26.

Business rates will be reformed to make them fairer and with more frequent revaluations. Property improvements will not lead to immediate increases in valuations for business rate purposes. There will be no fundamental reform to the regime yet.

What will be welcomed is a new one year 50% business rates discount for the retail, hospitality, & leisure sectors. A tax cut worth almost £1.7bn and with Small Business Rates Relief over 90% of all these businesses will see a discount of at least 50%. Taken together, business rates are cut by £7bn.

As a nod towards the argument that online sellers have an unfair advantage in terms of paying less business rates than those using bricks and mortar, the government will consult on a new Online Sales Tax which will explore the arguments for and against its introduction.

The Chancellor says he wants taxes to have fallen by the end of this Parliament, which is a bold statement to make considering the next election could be in 2023 or 2024. As a starter, by December of this year he is cutting the Universal Credit Taper Rate by 8p, from 63p to 55p. This makes it less of a tax on employment, although the taper rate for the lower paid remains very high.

For those better off there were sighs of relief on the absence of major changes to pension tax relief or Capital Gains Tax rates.

Ongoing COVID-19 help for businesses was offered with an extension of the Recovery Loan scheme until 30 June 2022.

Overall, there are tax rises ahead and there is more public money being spent, pushing up debt. Will "tax and spend" be the essence of Rishinomics, or will the Chancellor try to cut taxes in the next couple of years and reign in the spending? That will depend on the outcome of battles between No 11 and No 10 Downing Street, as well as the achievement of high rates of growth and low rates of inflation and interest rates.

High rates of growth also reduce the size of the government's debt as a percentage of GDP, giving Sunak more room to manoeuvre for his desired tax cuts before the next election.

Full Budget Summary and Tax Tables

You can download the full summary and tax tables here:

Full Budget summary (pdf)
Tax Tables 2022/23.(pdf)

Brief recap – key changes previously announced: (see also: What will be in the Budget?)

Autumn Budget 2021 new key measures announced:

Heavy goods vehicle levy frozen
New Residential Property Developer tax rate will be 4%
New £4.8bn grant funding for local authorities
An extra £4.7bn of funding for schools by 2024-25
New funding to turn over 100 areas of derelict land into new ‘pocket parks’
New investment of £850m to protect museums, galleries, libraries, and local culture, and extend the tax relief until April 2023 for museums and galleries.
£20bn a year to be spent on R&D on top of R&D tax reliefs
New scale up visas to attract skilled workers to the UK
R&D tax relief is expanded to include cloud computing and data costs within eligible spend.
From April 2023, R&D relief to be focussed on UK activity only
Multiply is a £560m, three-year plan to improve basic maths skills and change people’s lives across the whole UK
Tonnage tax regime to be reformed
Air Passenger Duty - internal UK flights subject to a lower rate of duty (which seems at odds with the government's low-carbon agenda). International travellers will pay more.
The £1m Annual Investment Allowance will not end in December as planned, it will be extended all the way to March 2023.
Business rates to be reformed, but not as radically as hoped.
50% discount on business rate for businesses in the hospitality sector.
Alcohol duty to be reformed to make it simpler, with rates to be based on the strength of the drink
New smaller drinks producer relief to help the likes of cider producers
A new draft relief for draft beers and ciders from April 2023
Planned rise in fuel duty cancelled.
Universal Credit taper is cut from 63% to 55% by December 2021 in order that people can keep more of the benefit
An extension from 30 days to 60 days for making CGT returns and associated payments on account when disposing of UK land and property, applying to UK residents only.
Van benefit charge and the car and van fuel benefit charges to rise by the CPI from 6 April 2022.
The flat-rate van benefit charge will increase to £3,600; the multiplier for the car fuel benefit will increase to £25,300; and the flat-rate van fuel benefit charge will increase to £688.
Minor amendments made to the forthcoming Plastic Packaging Tax.
From 6 April 2028, the earliest age at which most pension savers can access their pensions will rise from 55 to 57.
The adult ISA annual subscription limit for 2022/23 is frozen at £20,000, and the junior ISA limit is frozen at £9,000.
NI limits and thresholds to be uprated by 3.1%, and the rates of Class 2 and 3 NICs, for 2022/23. This excludes the Upper Earnings Limit and Upper Profits Limit which will be maintained at 2021/22 levels.
Recovery Loan scheme extended to 30 June 2022.
Further clarity on how the basis period reform will work for sole-traders and partnerships will be published on 4 November 2021.

Tax Tables 2021

Tax rates and allowances from 6 April 2022 can be downloaded here.

Finance Bill 2021-2022

An updated Finance Bill 2021-2022 will be published on 4 November 2021 to reflect the above announcements.

[Gary Mackley-Smith]

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