With us only a few days away from the Autumn Budget, all eyes will be on the latest announcements of budgetary plans from the Chancellor of the Exchequer, Rishi Sunak, but what is the Autumn Budget, and what can people expect to hear?
Four areas of attention
The Autumn Budget usually takes place in October, outlining the policies, strategies and financial plans for the coming 12 months. The budget provides the Government with the funds it needs to run its operations and almost always includes funding for health care, education, defence, housing and many other important areas.
However, with the Chancellors big announcements looming, many will be wondering what is going to stay and go in his latest statement.
A budget built for recovery
As a result of Covid, the national debt is the highest it’s been since 1963, but the Chancellor seems to have a plan to reduce that with the removal of the £20 a week Universal Credit lifeline, the end to the furlough scheme, and the recently announced 1.25% National Insurance and Dividend Tax increases (which have gone down about as well as you can imagine). The big question becomes what other belt-tightening restrictions are on the way.
Perhaps, the recent boom in the recruitment market with 1.2m job vacancies, and employment numbers back to pre-pandemic levels, may spell good news, but the reality is that there are still sectors struggling, especially hospitality, travel, and retail. How will the Chancellor inject new hope for these sectors, while helping to continue economic growth across the board? The reality is that he probably won’t, but it’s fun to dream, right?
What does the budget mean for businesses?
With corporation tax set to increase in 2023, Sunak is expected to turn his attention elsewhere.
Following ‘simplification’ reviews by the Office of Tax Simplification (who comes up with these names?!), expect changes to Inheritance Tax and Capital Gains Tax from – especially considering the high level of revenues that IHT brings into the Treasury.
There have been rumblings that CGT would be aligned more with income tax rates, scrapping the current 10% and 20% (or 18% and 28% for property). Considering it’s paid by less than 300,000 taxpayers, wholesale changes won’t create a landfall of extra cash, but it’s worth keeping an eye on.
There are expected to be further measures for business growth, although what they will be is up for debate. According to some, it’s possible that more sector-based schemes could be announced, much like the 2,000 AI scholarships unveiled at the recent Conversation Party conference in Manchester.
We are still waiting to read the findings of the Government’s Business Rates Review, which the Chancellor promised would come in Autumn. Don’t expect anything radical in the way of reforms for this budget, but we wouldn’t be surprised if they announced a consultation into technical changes sometime in the future to improve the way things work.
Increase to minimum wage
A 5.7% increase in the national minimum wage for those aged 23 and over is expected, taking the figure to £9.42 per hour. This equates to an extra £77 a month before tax for those working a 35-hour week.
Other things to look out for
The temporary VAT reduction for hospitality and tourism ends this month, with businesses returning to the 20% charge from the much loved 5%. With hospitality seeing an uplift in bookings since the lifting of many restrictions, the chances of this being reversed are slim to none, so be prepared to pay more as you celebrate the festive period.
Sustainability is going to be big on the agenda, especially as it takes place mere weeks before the international climate summit, COP26. While we got many major announcements on the 19th of October, brace yourself for green homes and business talk in the latest budget.
As energy prices continue to soar, you can expect some comment around this from the Chancellor, who is reportedly considering a 5% VAT cut on household energy bills. While this would be welcomed by voters, it’s likely to cost about £1.5bn a year. His plan B is to ask people to start wearing jumpers and slipper socks before thinking about touching the heating. It’s also bad timing to be talking about subsidising fossil fuels before COP26, not if he doesn’t want a bunch of angry protestors sitting at the end of his driveway.
We’ll be doing a complete round-up of the Autumn Budget, so make sure you follow us on social media and check back for more information.
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