Chancellor Rishi Sunak took to the floor on Wednesday, October 27th to deliver his second Budget of 2021, in which he shared his plans for the nation’s finances over the next year.

 

With changes to National Insurance rates, pay rises for public sector workers, and an increase on the national living wage already announced, many were wondering if this would be the most predictable Budget to date – but fans of a dramatic surprise will be pleased to hear, Rishi still had a few tricks up his sleeve.

 

Here’s a run down of all the news from the Chancellor’s 2022 announcement…

 

The state of the economy

 

The Chancellor began, as usual, with an update on the economy’s health – which, given the impacts of Covid and Brexit, was expected to be a grim tale.

 

But the announcement wasn’t quite as bad as first expected; the economy is forecast to return to pre-Covid levels by 2022, unemployment is expected to peak at 5.2 per cent last year (rather than the 11.9 per cent originally predicted), and wages have grown in real terms by 3.4 per cent since February 2020.

 

Inflation, however, was 3.2 per cent in September and is likely to rise even further.

 

Despite this, the Chancellor has pledged a major increase (£150 billion) in public spending by 2024-25 and promised a “new economy, post-Covid”.

 

Changing business rates

 

Despite calls for another business rates cut, the Chancellor has confirmed that rates will remain at the same level to avoid needing to find billions in extra borrowing.

 

There will, however, be some changes to the system including a new 50 per cent discount for businesses in the retail, hospitality and leisure sectors. This will mean eligible businesses, ranging from pubs and restaurants to theatres and gyms, can claim a discount up to a maximum of £110,000 – a tax cut worth almost £1.7 billion.

 

From 2023, every business will be able to make property improvements and, for 12 months, pay no extra business rates. There will also be more frequent re-evaluations of rates for businesses, taking place every three years.

 

Fuel duty rise cancelled

 

Following the recent fuel crisis, and panic-buying that ensued, the planned rise in fuel duty will be cancelled. This means that after 12 consecutive years of frozen rates, the average car driver will save a total of £1,900.

 

National living wage rise

 

As expected, the national living wage will increase next year by 6.6 per cent to £9.50 an hour. For a full time worker, this means a pay rise worth over £1,074 over the course of the year.

 

The rise will benefit millions of the lowest paid workers across the country, while also supporting employment returning to pre-pandemic levels and businesses advertising record numbers of vacancies.

 

Prosecco and pint prices to fall

 

Prosecco lovers, rejoice – taxes on sparkling wine, draught beer and cider are to be cut.

 

As part of a new system, due to start in 2023, the duty premium on sparkling wines will end, while the duty on draught beer and cider served in pubs will be cut. The planned increase in duty on spirits, wine, cider and beer – which was due to take effect from midnight on October 27th – has also been cancelled.

 

In what Rishi called the “most radical simplification of alcohol duties for over 140 years”, rates will increase in line with the strength of the drink.

 

It’s hoped that the lower rate of duty for draught drinks – which will cut the price of a pint by about three pence – will benefit struggling pubs, especially those that mainly trade on draught.

 

Boosts for sports and culture

 

Pubs, restaurants and leisure centres aren’t the only ones to have been hit hard by the pandemic – “local culture” settings such as museums, galleries and libraries have also suffered from closures and reduced visits.

 

Which is why the Chancellor has announced a package of £850 million to protect such places. More than 100 regional museums and libraries will be renovated, restored and revived, while tax relief for museums and galleries, which was due to end in March 2022, will be extended for two years to March 2024.

 

Infrastructure

 

With COP26 just around the corner and climate change high on the agenda, the Chancellor was facing calls to ensure plenty was invested into the development of infrastructure to support active and sustainable travel.

 

He responded with an allocation of £46 billion to be spent on railways, and a guarantee to spend £5.7 billion for London-style transport systems across city regions.

 

More than £5 billion will be spent on improving cycling infrastructure, while the same figure will be used for local minor road upgrades.

 

Other updates

 

  • In a boost to regional airports, flights between airports in England, Scotland, Wales and Northern Ireland will be subject to a lower rate of air passenger duty from April 2023

 

  • £11.5 billion will be spent to build up to 180,000 affordable homes, with brownfield sites targeted for development

 

  • A further £5 billion is earmarked for the removal of unsafe cladding from high-risk buildings

 

  • An extra £2.2 billion will be allocated for courts and rehabilitation facilities, as well as the appointment of 20,000 new police officers

 

  • The Universal Credit taper – which reduces financial support as people work more hours – will be cut by eight percentage points to 55 per cent, resulting in a tax cut worth more than £2 billion

 

  • £150 million has been promised to support and train those working in early years, along with more funding for holiday and activity programmes

 

If you have any questions on the Budget and how it may affect your business, get in touch with our team on 01642 244090 or info@chuhanandsingh.co.uk.