Rishi Sunak announced his third Budget yesterday, following two that were dominated by short term pandemic-related support measures. The Chancellor presented this Budget as a foundation for the stronger economy of the future.

While he acknowledged challenging months to come, including the continued rise in inflation and higher rates of taxation, he reported that economic recovery from the effects of the pandemic is occurring at a faster rate than had been expected and measures provided during the pandemic have resulted in fewer people out of work than previously feared.

Here is your summary of the announcements affecting business owners.

Your Business

National Minimum Wage Increase

The rise in the National Minimum Wage from £8.91 to £9.50 on 1 April 2022 was confirmed.  For a worker aged 21 to 22, the rate will increase from £8.36 to £9.18.

The Government targets to increase these rates to more than £10 per hour by the next election.

Your Business Tax

The rise in Corporation tax as announced in the March Budget is still to come from April 2023.

Annual Investment Allowance Extension

The current £1million annual investment allowance has been extended to March 2023.

New Business Rates Improvement Relief

From 2023, businesses will be able to make property improvements and pay no extra rates for 12 months. The Chancellor also announced the following measures in an attempt to make the business rates system fairer:

  • Business rates re-evaluations every three years from 2023
  • The increase in the business rates multiplier – the rate by which property values are multiplied before any business rate relief is applied – proposed for next year has been cancelled

Business Rates Discount for the Hospitality Sector

The Chancellor continued his support of the hospitality, retail and leisure sectors hard hit by the pandemic.

Eligible businesses will be able to claim a discount on their business rates of 50%, up to a maximum of £110,000. This discount will last for a period of one year.

New Green Investment Relief

A new tax relief to encourage businesses to invest in green technologies such as solar panels will be introduced.

Research and Development (R&D) Tax Relief Modernisation

The Government is modernising the R&D tax relief system to increase the level of R&D activity.

The current tax credit system will be widened to cover investment in cloud computing and data costs. It will also be amended to ensure this tax relief is only given for R&D activity undertaken in the UK.

In addition to these measures, the Chancellor targets an increase in Government spending on R&D investment to £22bn.

A £1.4bn British Investment Fund will also be put in place and a ‘scale-up’ visa introduced to aid recruitment from overseas.

Fuel Duty Increase Cancelled

The planned increase in fuel duty has been cancelled in light of the current high level of fuel costs.

Your Personal Tax

As announced in the Chancellor’s March budget, a new health and social care tax is due to come into force from April 2022, to be funded by an increase in national insurance contributions.

Capital Gains Tax Reporting extended

The deadline for reporting disposals of UK residential properties that complete after 27 October 2021 and payment of Capital Gains Tax has been extended from 30 to 60 days after the completion date.  Relevant disposals that complete before 27 October 2021 are still subject to the 30 day deadline.

For mixed use properties, only the portion of the gain relating to the residential part should be reported and paid to HMRC.

Universal Credit Taper Rate Cut

Following the end of the extra £20 per week in Universal Credit paid to claimants which ended at the beginning of this month, the Chancellor announced that the Universal Credit Taper Rate, the rate at which claimants lose benefits as they earn more money, will be reduced from 63% to 55%, from no later than 1 December 2021.

He claimed that this move will benefit nearly two million families who will keep an extra £1,000 per year in Universal Credit on average.

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Strengthening Your Business

We continue to publish guides and resources to help you use our Post-Lockdown Business Action Plan Tool to strengthen your business. To make use of these resources, visit our website resources section.