Autumn Budget review
The Chancellor today (27th October) unveiled his Autumn Budget. As with all Budget announcements, the devil is in the detail and further information will no doubt be released by the government shortly. However, today’s announcement covered the following points:
- The Chancellor said that ‘our plan is working’ and that there will be ‘challenging months ahead’.
- Office for Budget Responsibility (OBR) forecasts inflation will average 4% next year.
- OBR shows GDP will grow by 6.5% this year, 6% next year, 2.1% in 2023, 1.3% in 2024, 1.6% in 2025.
- Unemployment is forecast to peak at 5.2%, down from a forecast for about 12% forecast last year.
- New “fiscal rules” for management of the public finances: Debt must fall as a percentage of GDP. In “normal times” the state should only borrow to invest in future growth. This must happen by the third year of each forecast period.
- Real terms rise for every government department.
- Departmental spending will rise by £150bn.
- Spending will grow in real terms by 3.8% a year.
- There will be grant funding for local government of £4.8bn.
- Overseas aid will return to 0.7% of GDP by the end of the parliament.
- The planned reduction of the rate of the Annual Investment Allowance (AIA) will be deferred to 31 March 2023 meaning qualifying capital expenditure of up to £1m can continue to be incurred and obtain full tax relief.
- Tax relief for business R&D spending limited so that it only applies to domestic activities, but qualifying costs will be extended to include cloud computing costs.
- New business rates improvement relief: from 2023 every single business will be able to make property improvements and for 12 months pay no extra business rates.
- Next year’s planned increase in the business rates multiplier will be cancelled.
- 50% business rates discount for companies in retail, hospitality, and leisure sectors, up to a maximum of £110,000.
- HGV Levy suspension extended to 2023 and vehicle excise duty frozen for heavy good vehicles.
- Bank surcharge to be cut from 8% to 3%.
Infrastructure and investment
- Investment of £21bn in roads and £46bn on railways to improve journey times between cities.
- The government’s target for hitting research and development spending will reach £22bn by 2026/27, two years later than had been initially planned.
- The government will invest £20bn in R&D by 2024/25.
- Tax relief for business R&D spending limited so that it only applies to domestic activities.
- Internal domestic flights will have air passenger duty cut.
Pubs and alcohol duty
- Higher strength alcoholic drinks will attract higher duties.
- New “draught relief” cutting duty on beer and cider sold in pubs.
- The cost of a pint will be permanently cut by 3p.
Cost of living
- Fuel duty increase to be cancelled.
- National living wage will increase from £8.91 to £9.50 an hour from April 2022.
Taxation and universal credit
- Reduction in the taper rate in universal credit from 63p to 55p.
- Capital Gains Tax (CGT) reporting deadline for sale of certain property extended to 60 days from 30 days.
If you would like to discuss any areas covered in today’s Budget, please feel free to get in contact with Steven Jones on 01905 794 504.