What Does the Autumn 2021 Budget Mean for You?
In what was a highly anticipated (and largely leaked) budget, Chancellor Rishi Sunak laid out his plans to “build back better” with ambitions to level up and reduce regional inequality. His speech covered aspects about how the new budget will help families meet the rising cost of living, from changes to benefits to the price of beer and flights. It was very much grounded in the “post-Covid” era, setting the foundations for the Prime Minister’s “economy of higher wages, higher skills, and rising productivity”. But what are the key points and what does this all mean for individuals and businesses?
Minimum Wage Increase
The National Living Wage will move from £8.91 to £9.50 for workers over 23 years of age from 1st April 2022. This equates to a 6.6% rise and means over £1000 a year before tax for people working 35-hour weeks.
Universal Credit Taper Rate
The rate at which you lose benefits for each £1 you earn above £515 month. This will be cut to 55% from 63%, meaning that claimants keep an additional 8p for every £1 of net income they earn. This has been viewed as a salve after the temporary uplift to Universal Credit was removed.
State Pension increase
The scheme is being extended until 30 June 2022, which means that all eligible businesses may apply for finance of up to £2 million to aid recovery from the pandemic.
National Insurance Rise
As announced back in September, an extra 1.25% is being added to National Insurance contribution from April 2022 until April 2023. After this, it will be a stand-alone Health and Social Care levy which will apply to all workers and to those above State Pension age who are still in paid employment. It is money that must be spent on the NHS and Social Care. NI contributions will return to their 2021-22 levels when this is introduced.
Personal and Corporation Tax
There are no changes to the Personal Tax threshold, which will remain at £12,570 until April 2026. The higher rate will stay at £50,270 and Capital Gains Tax at £12,300 as well. However, Dividend Tax will increase by 1.25% in 2022-23. Corporation Tax is also increasing from 19% to 25% in April 2023, unless profits are below £50,000 in which case it will stay at 19%.
Alcohol, Fuel and Air Travel
The Chancellor announced a radical overhaul on Alcohol Tax, which will tax drinks based on their strength not their category. In an effort to support pubs, duty on draught beer and cider will be cut by 5%. A planned fuel duty rise has been cancelled for the 12th consecutive year as fuel prices reach record heights. Long-haul flights will be more expensive from April 2023, as a new ultra-long-haul band of Air Passenger Duty is introduced. In contrast, domestic UK flights will get cheaper when a 50% APD is brought in in this same month.
Incentives to Tackle Climate Change
Along with the additional levy on long-haul flights, the Government is looking to invest £3.9 billion to decarbonise buildings, which includes £450 million going towards the expanding heat pump market.
Support for Retail, Hospitality and Leisure
Shops, gyms, restaurants, hotels, and other companies in this sector will see a 50% business rates discount, up to a maximum of £110,000, for the 2022-23 tax year.
It has been projected by The Office for Budget Responsibility (OBR) that inflation will reach 4% by the end of the year.
For more detailed information on the changes resulting from the Autumn Budget, we’ve attached a report here for you to read.
Talk to Us About Understanding the Impacts on You
With so many aspects covered in the budget, it can be difficult to unravel exactly what is and isn’t applicable to you and your business. At Hysons, Chartered Accountants, we have been helping individuals, charities and businesses with an array of accounting services for over 30 years. With this experience, our skilled team can help answer any questions you may have about the impact of the Autumn Budget and how you can remain financially stable. Get in touch with our friendly team of skilled accountants and let us help make sense of what it all means for you.