Mark Tibbert,Partner at Thomas Westcott Chartered Accountants, picks out the key points from Chancellor Rishi Sunak’s Autumn Budget and Spending Review.
This was the first time the current Chancellor has had a chance to consider delivering a Budget Statement without national restrictions being in place.
Although the impacts of Covid are still being felt, there are clear signs of an economic bounce back, and with the forecast revenues ahead of when he gave his last Budget in March 2021 this has given the Chancellor the opportunity to be more optimistic.
Although breaking with tradition, to the annoyance of some, the Chancellor and the government had released statements ahead of the statement on some key policy changes. Most notably;
Increased spending for:
- Transport – £6.9bn (albeit this is only a real £1.5bn as it includes the 2019 promise of £4.2bn)
- Health – £5.9bn to tackle the backlog in the NHS
- Health research – £5bn over the next three years to help R&D
- Education – £2.6bn to create new school places for those with special education needs, and £1.6bn over three years for the rollout of new T-Levels
- The removal of the public sector pay freeze.
An increase in the National Living Wage to £9.50 from April 2022, which it is expected will benefit around two million individuals.
With so many giveaways ahead of his statement we were slightly apprehensive as to how this would be paid for. However, it seemed the rabbit out of the hat in his statement was the absence of any real increases. Instead it seemed it was all about more giveaways with a continued focus on encouraging investment and growth, but always with an eye on keeping the books balanced.
Although as always the devil will be in the detail as we work through the pages of documents released after he finished speaking the main points to come from his speech were:
Despite comments made by some over the last few weeks, inflation is rising and he acknowledged that the price increases that we are all suffering will be with us into the New Year.
A new Charter for Budget Responsibility will be put to a vote in the House to show the commitment to fiscal responsibility and balancing the country’s books.
On taxation specific points, again it was predominantly all good news, with no increases in tax other than the previously announced Health and Social Care Levy which is in effect a 1.25% tax increase on all earnings and dividends.
For those in the South West the key plus points to take away were:
- The 100% tax relief available to businesses on the first £1m of capital spend will be extended until 31 March 2023.
- Air Passenger Duty rates for domestic flights will be cut, this could help our local airports in the South West become more sustainable transport hubs for the region.
- Business Rates, a contentious subject, will not be abolished as some had been calling for. However, a 50% rates relief for retail and hospitality businesses will be welcome news for those industries and with a cap of £110,000 per property should help many of our businesses across the South West get full benefit.
- Alcohol duties featured prominently, and with a simplification and drop in rates for lower strength drinks, further relief for draught sales and a levelling up of sparkling wine with wine will all be welcome news to the Regions drinks producers.
- Finally, for individuals although arguably only a small step a reduction in the tapering of the Universal Credit withdrawal for those taking on work will help many reliant on it for income.
All in all, it was a promising statement and with a final statement that the Chancellor would be looking to bring in tax cuts before the end of their term should be seen as welcome news by many.
Mark Tibbert BFP FCA
Mark Tibbert is a Partner at Thomas Westcott and is based across the firm’s Barnstaple and Bideford offices.
Mark has a particular interest in tax advice and has advised owner-managed businesses through to international corporate organisations on reorganisations, acquisitions and disposals, and share schemes.
“I’ve advised on the UK tax aspects for acquirers and vendors of deals from £100,000 through to £80million+, covering the structure of the transactions from both a corporate and personal tax perspective, negotiating tax warranties and indemnities, and compiling due diligence reports.”
Mark is a keen cyclist and can be found scaling hillsides and mountains around the country with his mountain bike on his days off.