The 2021 Autumn Budget In Review
Now the dust has settled from 2021’s Autumn Budget speech, it’s time to filter through the noise and extract exactly what it means for you.
Rishi Sunak started as he meant to go on – in overwhelmingly high spirits. The Chancellor opened by announcing the revised annual growth rate from 4% to 6.5%, relishing in confirming the UK’s return to pre-pandemic levels before the year’s out. Promises to tackle the skills shortage by investing in a high-skilled economy were positive too, as Sunak proclaimed he is ‘backing business’.
So, what does this all look like for specific sectors? How do the self-employed fare, and has the outlook for employers and contractors actually improved? We put the Budget under the microscope…
Happy hospitality and invested infrastructure
After being battered and bruised throughout the pandemic, hospitality businesses finally received some respite. For the next 12 months, they can benefit from a 50% business rates discount up to the value of £110,000. It’s the biggest single-year tax cut in 30 years.
The Chancellor also stated he will be using Brexit as a stepping stone to radically simplify our ‘outdated’ alcohol duty system. The number of rates will be reduced from 15 to 6. This includes a draught relief on beer and cider, and a scrapped surcharge on sparkling wine. All other initially planned alcohol duty increases were cancelled at midnight on the day of the speech too. This is a welcome relief for pubs who were already struggling pre-pandemic.
Moving to infrastructure, and by 2026/27, Sunak targets a £22bn growth in research and development investment. Additionally, Innovate UK’s core budget is up to £1bn, while £30bn will be invested into new green industries. Reaffirming his views on future success and lifelong learning, the Chancellor also increased skills spending by a huge 42% to £3.8bn – a vision of opportunity for the construction industry.
The devil’s in the detail
Heavy infrastructure investment and further duty freezes is good news on the whole for contractors and employers in this sector. Namely, the cancellation of the planned rise on fuel duty means an average tank will cost £15 less per car, equating to £1,900 less per year. In addition, the lack of news around Capital Gains Tax triggered a collective sigh of relief.
But while the 50% increase in R&D bodes well, the strong focus on domestic investment heavily limits firms who use contractors outside of the UK. And although the Chancellor cancelled and froze planned increases around alcohol and fuel duty, there was no mention of other raw and recent changes such as Corporation Tax rises, National Insurance and dividend changes, and the IR35 reform.
A rose-tinted view
At surface level, the tone of the 2021 Autumn Budget was overwhelmingly positive. But it doesn’t undo the aforementioned recent changes that have wreaked havoc for employers and contractors over the last 18 months. Overall, the Budget offered very little in the form of reassurance or support for the millions of self-employed businesses who have already faced severe financial hardship.
So, whether you’re a freelancer, a contractor, a recruitment agency or opening an office overseas, you need someone on your side. Workr Group offer a range of services and solutions to help you tackle the obstacles ahead. For more information, call us on 0208 10 60 000, email firstname.lastname@example.org, or book a call today.
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