Autumn Budget 2021

Many announcements were made ahead of yesterday’s autumn budget including more money for the NHS, a rise in the National Living Wage and public sector pay rises.

By being outside of the EU the Government has taken advantage of the flexibility this offers.

Here we offer a round-up of other key points from yesterday’s announcements.

R & D Tax Reliefs

Gross expenditure on R&D in the UK in 2019 was 1.8% of GDP, lower than other advanced economies a trend primarily driven by low business investment in R&D.

To counterbalance this the government is increasing public R&D investment to record levels, providing £20 billion across the UK by 2024-25, establishing the UK as a global science and technology superpower.

R&D tax reliefs are being reformed to support more modern research methods by expanding qualifying expenditure to include cloud computing and data costs.

Shipping and Travel

The government will make significant reforms to the Tonnage Tax Regime (originally introduced in 2000). With the modernisation of the tax regime the government hopes to bring jobs and investment the UK in particular coastal communities. The reforms will take place from April 2022.

The government aims to make domestic travel across the UK more accessible with a 50% cut in Air Passenger Duty. This cut will be applied England, Scotland, Wales and Northern Ireland. The duty cut will not include private planes.

In addition, the government will introduce a new ultra-long-haul band, covering destinations with capitals located more than 5,500 miles from London.

Annual Investment Allowance extension (AIA)

UK business will get support from the government with an extension to the temporary £1 million level of the Annual Investment Allowance to 31 March 2023. With more upfront support the government hopes businesses will bring forward investment, and make managing tax simpler for those investing between £200,000 and £1million

Business Rates

The government wants to reduce the liability of business rates, support investment and make a more reactive system.

The Business rate multiplier will be frozen for the second year keeping the multipliers at 49.9p and 51.2p from 1 April 2022 until 31 March 2023.

50% business rate relief will be temporarily offered to eligible businesses in the retail, hospitality and leisure sectors. The reduction will be available for 1 year and capped and £110,000.

Alcohol Duty Reform

The alcohol duty will be restructured so that alcoholic beverages will be taxed in direct proportion to their alcohol content. The number of rates will be reduced from 15 to 6. Sunak also cut tax on sparkling wines such as prosecco, pointing to an increase in the number of people drinking them, which he said showed they were no longer elitist, therefore didn’t warrant the high tax rate. A small producer relief will be introduced including cider producers (where the ABV is 8.5% or less).

There will be a 5% tax decrease in a ‘draught relief’ on drinks served from pumps such as beer and cider, the aim is to help struggling pubs in light of the pandemic. This will reduce the price of a pint by 3p.

An increase in alcohol duty aimed to take place at midnight has been cancelled.

Fuel Duty

Petrol prices have recently hit a record high. It has been recognised that one of the biggest expenses for households in the UK is fuel. With this in mind fuel duty will be frozen at 57.97p per litre for 2022-2023. This is the 12th freeze on the trot, which the government estimates would have saved the average car driver £1900 since the freezes started.

Universal Credit

To support lower income families, and help them keep more of what they earn Rishi Sunak announced the government will be reducing the taper rate of universal credit by 8% and increasing Universal Credit working allowances by £500 a year, This will come into effect by 1st December 2021.

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