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What will be in the upcoming Autumn Budget for small businesses?

4-minute read

What will be in the upcoming Autumn Budget for small businesses?
Sam Bromley

Sam Bromley

8 October 2021

The second Budget in 2021 will be announced alongside a spending review on 27 October. With the UK still recovering, what could be in this announcement for small businesses?

The government will be looking at where to spend and invest – and also where to plug its financial gaps. Here’s what to watch out for.

1. A ‘technical Budget’ that makes tweaks to raise revenue

Tax advisory firm BDO predicts that the Chancellor may make a number of tweaks that amount to ‘stealth’ tax changes.

One of these has already been announced. The reform to basis periods for sole traders and partnerships is set for April 2024. This means that business profits will be calculated for the tax year rather than the accounting year. BDO says that while this is being branded as a simplification, “in practice, it will at the very least accelerate revenue for the Exchequer for 2023 and the next five years.”

If the government decides to avoid making ‘headline’ announcements, it may detail small changes like this one. For example, BDO says that “lots of commentators are also predicting changes to inheritance tax and capital gains tax following recent ‘simplification’ reviews by the Office of Tax Simplification.”

2. The outcome of the government’s spending review

The Chancellor will announce the outcome of a spending review that “will set UK government departments’ resource and capital budgets for 2022-23 to 2024-25 and the devolved administrations’ block grants for the same period.”

Expect to hear how the government will, over the next three years:

  • invest in public services, across the NHS, education, the criminal justice system and housing
  • spread opportunity across the UK, improving lagging places by working with local leaders and strengthening the private sector where it’s weak
  • lead the transition to net zero across the country and globally
  • advance “Global Britain” and seize the “opportunities of EU exit”
  • develop “plans for an infrastructure and innovation revolution” and cement the UK as a “scientific superpower”

3. Will fuel duty stay frozen?

In March, the government announced that fuel duty will be frozen at 57.95p for the eleventh consecutive year.

But The Telegraph reports that Boris Johnson hasn’t ruled out a fuel duty rise for the upcoming announcement.

And Matthew Walters, head of consultancy services at LeasePlan UK, says that if the government doesn’t specifically announce that they’re maintaining the freeze, fuel duty will rise: “It’s worth noting that without any reference to an extension from the Chancellor the freeze will automatically end. That’s because existing legislation around fuel duty stipulates how much it goes up by each year.”

4. More on the ‘Plan for Jobs’ extension

The Chancellor has already announced a £500 million Plan for Jobs extension to help people back into work.

For small businesses, note that the Kickstart Scheme will now last until March 2022, with applications closing on 17 December 2021.

Through this scheme, you can hire young people aged 16-24 and on Universal Credit for six-month work placements, funded by the government.

The government has also extended the £3,000 incentive for every apprentice you hire until 31 January 2022.

The spending review on 27 October will confirm specific funding for each measure.

5. Will the government listen to calls to keep VAT low?

The temporary reduction to hospitality and tourism VAT ended 1 October, when it increased from five per cent to 12.5 per cent. It’s due to return to pre-pandemic 20 per cent in April 2022.

But the industry is pushing the government to keep VAT at 12.5 per cent to aid continued recovery.

According to BigHospitality, trade bodies UK Hospitality, the British Beer and Pub Association, the British Institute of Innkeeping, Tourism Alliance and the Association of Leading Visitor Attractions are warning that rising VAT “risks derailing the recovery...when businesses are still in survival mode.”

6. What’s happening with capital gains tax?

In 2020 the Office for Tax Simplification (OTS) recommended that the government should bring capital gains tax in line with income tax.

Capital gains tax is a tax on the profit of an item sold that’s increased in value. It’s the gain that’s taxed, rather than the amount of money received.

The OTS recommendations, if implemented, would see the tax rate on capital gains rise to 20 per cent for basic rate taxpayers. The rate for higher rate taxpayers would rise to 40 per cent.

During the March Budget, the government froze the threshold at which you start paying capital gains tax at £12,570 until 2026. Keep an eye out for any further changes to the tax on 27 October.

7. More details on Help to Grow: Digital

In March, the government announced the Help to Grow scheme for businesses with employees. The scheme aims to “help you learn new skills, reach more customers and boost your profits.”

Help to Grow: Management, which aims to help businesses develop strategic skills, has already launched.

The second part, Help to Grow: Digital, will launch this autumn. This is free advice on how technology can help your business, with a discount of up to 50 per cent on the costs of approved software, worth up to £5,000.

You need to have between five and 249 employees, be registered at Companies House, and have been trading for 12 months.

The government says full details on eligible businesses and software will be revealed this autumn, so further information may be given on 27 October.

What’s already been announced?

  • a National Insurance hike of 1.25 per cent from April 2022
  • the publication of the long-awaited business rates review in autumn 2021

What would you like to see in the upcoming Autumn Budget? Let us know in the comments below.

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