Chancellor, Rishi Sunak, delivered his statement to Parliament on 27 October 2021. So, what are the key issues and how does this affect your business?

Business Rates Relief

There will be a new ‘business rates improvement relief’. As of 2023, firms will be able to make property improvements, and will not need to pay any additional business rates for a period of 12 months.

The Government has also announced that it will be freezing the business rates multiplier for another year, meaning that ratepayers will be saving around £4.6 billion over the course of the next five years. This means that any eligible company can claim a discount on their bills of 50%, up to a maximum amount of £110,000 – a business tax cut worth almost £1.7 billion according to the Chancellor.

Tonnage Tax Regime

A post-Brexit reform to the Tonnage Tax Regime will be implemented to ensure that the UK shipping industry remains highly competitive in the global market. These reforms are planned to have a positive impact on the UK shipping industry through changes to make it easier to join the regime and boost the use of the UK flag.

Those in the haulage sector will also enjoy the extension of the suspended HGV levy until 2023 and the freezing of Vehicle Excise Duty for HGVs.

Annual Investment Allowance

Chancellor announced that the £1million annual investment allowance will be extended to March 2023. It was initially scheduled to end in December of this year. Sunak confirmed that the bank surcharge will be cut. The chancellor also announced that corporation tax will be raised from 19% to 25%.

Tax Relief for Arts Sector

For the culture and arts sector, the sunset clause tax relief for museums and galleries will be extended until 2024 and the cultural relief rate for the arts sector is set to be doubled until 2023.

Alcohol Duty Rates

The Chancellor has scrapped the planned duty increase on spirits, wine, cider and beer.

He also outlined some major changes to alcohol taxation, which are set to come into effect from February 2023. This includes:

  • The main duty bands will be cut from 15 to six;

  • The system will be based on a higher tax for products with a higher alcohol content;

  • There will be a lower duty rate for craft producers;

  • The duty premium for sparkling wine will be cut too, so that it is in line with still wines of equivalent strength;

  • Draught beer and cider will benefit from lower duty rates; and

  • The system will be simplified for registering and paying for alcohol duty.

National Minimum Wage set to rise to £9.50 p/h next year

The National Living Wage will rise to £9.50 from 1 April 2022. This represents an increase of 59 pence or 6.6 per cent.

The increases announced today will support the wages and living standards of low-paid workers at a time when pay growth is robust across the economy. It comes against a backdrop of strong GDP forecasts, employment returning to pre-pandemic levels, and businesses advertising record numbers of vacancies.

You can find out more about the employment law announcements from the Chancellor’s Budget here.

Bank Levy set to be cut to 3%

Banks are set to save £4billion in taxes over the next five years from a cut to the banking surcharge as of April 2023.

The Chancellor stated that the surcharge of 8% is set to be cut to 3% in order to “maintain the competitiveness of our financial services”.

The Budget Red Book states that as a result, the amount paid by banks will fall by £220million next year, £830 million in 2023/2024; £975 million in 2024/2025; £995 million in 2025/2026 and £1.02 billion in 2026/2027.

The overall rate of corporation tax on banks will in 2023 increase from 27% to 28%, and will remain higher than the rates paid by other companies.

This is a rise from the current threshold of £25 million before the surcharge kicks in, adding around 35 banking groups who will fall out of the scope of the surcharge completely.

Banks currently pay 27% tax on their profits, made up of 19% corporation tax and 8% bank surcharge.

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