What Can Small Firms Expect From The Looming Autumn Budget - TS Partnersby Liz Seyi Digital marketing manager
Wednesday 27 October will see the announcement of
2021’s second Budget, alongside a spending review, by Chancellor of the
Exchequer Rishi Sunak. Some important developments have already been announced
– such as a rise in National Insurance from April 2022, and that the
long-awaited business rates review will be published in the autumn of this
But what else might the Government confirm about its tax, spending and investment plans for the year ahead, at a time when so many UK small businesses are still in recovery?
As one of the premier Wellington and Plymouth accounting companies here at TS Partners, we decided to take a look at what other changes the Autumn Budget might present.
A ‘technical Budget’ based on revenue-raising tweaks
Much speculation has centred on whether, in the current economic and political climate, the Government might wish to avoid headline-grabbing announcements in the Budget. There have been suggestions that instead of this, the Chancellor might make small tweaks that effectively constitute ‘stealth’ tax changes.
One such tweak that has already been confirmed is the reform to basis periods for sole traders and partnerships, which will take effect from April 2024. While this change to business profits being calculated for the tax year rather than the accounting year has been sold as a “simplification”, tax advisers have said it will also help accelerate revenue for the Exchequer over the years to come.
With inheritance tax and capital gains tax having also been subject to “simplification” reviews by the Office of Tax Simplification lately, it wouldn’t surprise us to see changes in these areas, too.
The results of the Government’s spending review
As mentioned above, 27 October will not just be about the Budget, as the Chancellor will also confirm the outcome of a spending review that “will set UK government departments’ resource and capital budgets for 2022-23 to 2024-2025 and the devolved administrations’ block grants for the same period.”
We can therefore expect to learn about how the government plans to focus over the next three years on such spending priorities as investing in public services and the NHS, spreading opportunity around the country working alongside local leaders, leading the ‘net zero’ transition, cementing the UK as a “scientific superpower”, and advancing “Global Britain” in the wake of Brexit.
Could VAT be kept low for the benefit of hospitality businesses?
Certain sectors of the economy have faced especially pronounced challenges as a result of the on-off restrictions imposed over the last year and a half to help control the spread of COVID-19. Businesses in these industries may therefore have much further to recover, which has made the hospitality and tourism VAT rate a subject of great discussion in recent weeks.
The temporary lowering of hospitality and tourism VAT ended on 1 October, which meant it rose from 5% to 12.5%. It is set to return to its pre-pandemic 20% rate in April next year.
However, has industry has urged the Government to hold VAT at 12.5% for longer to support the continued recovery. Bodies such as UK Hospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and the Association of Leading Visitor Attractions have warned that a further increase in the rate could threaten the recovery at a time when many firms “are still in survival mode”.
Support your firm’s continued recovery and growth
With the above being just some of the key areas that have been speculated about in relation to the Autumn Budget and spending review, it is safe to say all eyes will be on Mr Sunak as he unveils the Government’s direction on tax expenditure for the months and years to come.
In its position as one of the most trusted Wellington and Plymouth accounting companies, TS Partners stands ready to provide south-west England firms with the best possible accounting and business support, whatever is ultimately announced by the Chancellor. Simply contact our team by phone or email today for further advice and information.
Created on Dec 8th 2021 04:22. Viewed 144 times.