This year’s Autumn budget included more government spending than has been seen in decades – with the Chancellor looking to economic growth to cover the costs.
Businesses across the UK have suffered a hit during the pandemic, and increased Government investment may help give them the boost they need.
One encouraging aspect was the Chancellor’s overall goal of cutting taxes – although we will have to wait and see whether this will work as planned.
There were also some positive announcements for the freight and shipping, entertainment and hospitality sectors.
Here, Andrew Diver, Head of Taxation at Beatons Group, has a look at the budget and what it means to business.
Little change to taxes
There had been much speculation ahead of the budget on whether the Chancellor was going to increase taxes, especially those on business, to pay for post-pandemic investment.
Mr Sunak had put Corporation Tax up in March, and it is this increase that is largely funding his spending plans.
As his figures were based on 4.1% growth, and the figure is now closer to 6.5%, the chancellor has more tax revenue to play with – and has decided to invest.
His overall goal of cutting taxes in the future is also good to hear.
Help for sectors hit hard by pandemic
There was some positive news for the freight, shipping and logistics sectors in this Autumn budget.
Lorry park grants, the Heavy Goods Vehicle Levy being delayed until 2023 and fuel duty being frozen for the 12th successive year will all help ease the pressure.
The pandemic impacted most businesses, but one could argue the retail, leisure and hospitality sectors were among the hardest hit.
The Chancellor’s one-year 50% business rate discount should go some way to help those sectors bounce back after COVID-19 but we had hoped an extension to the temporary VAT rate of 12.5% for the sector might be announced.
Pubs have also been given a boost, with the reduction of duty on draft beer and cider looking to help support the industry, while the Chancellor also announced a more significant reform to the whole of the alcohol duty regime.
Some help for the lower paid
The increased National Living Wage and the reduction to the Universal Credit taper, from 63% to 55% could go some way to easing the financial burden for some and encouraging more people into work.
The big picture
Despite the increased investment, the forecast for increased inflation - at 4% - is set to put a squeeze on household incomes and there has been little in this budget to ease this.
The level of inflation it is likely to put pressure on the Monetary Policy Committee to increase interest rates which will have impact on the cost of servicing mortgages and other debts.
Businesses will also have to contend with the Health & Social Care Levy increasing payroll costs by 1.25% and the scheduled increase in dividend tax - so despite no new tax increases in this Budget there are significant tax increases coming in over the next couple of years.