Chancellor Rishi Sunak delivered his 2021 Autumn Budget at the end of October, presenting a number of financial initiatives and updates that will affect the UK economy. We’ve picked out the key announcements that will impact upon the small business.
Recovery Loan Scheme Extended
The Recovery Loan Scheme was introduced by the government in response to the COVID-19 pandemic. It has now been extended from 31 December 2021 to 30 June 2022, with changes being introduced in January 2022. The changes will affect who can access the scheme, the maximum amount of finance available and the guarantee coverage that the government will provide to lenders.
Annual Investment Allowance Extended
The level of Annual Investment Allowance will remain at £1 million until March 2023, which means businesses can continue claiming on qualifying assets up to the value of £1 million within a single year.
Business Rate Reforms
From April 2022, a 50 per cent discount in business rates of up to £110,000 will apply to businesses in the leisure, retail and hospitality sectors for 12 months. This follows the existing 66 per cent discount capped at £2 million, which is due to end on 31 March 2022.
The Chancellor also announced that a 100 per cent improvement relief would come into play in 2023, with a review set for 2028, and that business rates would be subject to a three-yearly review from 2023.
Additional R&D Tax Relief
Research and Development (R&D) tax relief will be made available for a wider variety of business expenses, including cloud computing and data. The Chancellor also announced that from April 2023, more R&D tax relief will be available for UK projects.
Income Tax Basis Rules
In April 2024, major changes to the Income Tax basis period rules will be introduced. This is the time period for which a sole trader or partnership pays tax each year. The future reforms will ensure that businesses pay tax on the profits they earn during the tax year, regardless of their accounting year dates.
Capital Gains Tax Deadline Extension
Contrary to widespread belief, the Chancellor did not announce any increase to Capital Gains Tax (CGT). However, it was revealed that the deadline for residential property owners to report and pay CGT following the sale of a property would be increased from 30 to 60 days from 27 October 2021.
The Treasury said that the extended payment window would provide taxpayers with sufficient time to report and pay any CGT due.
The decision to leave the CGT rate as it is for now means that any business owners selling residential property that forms part of their business assets will not be liable for more tax. However, a future tax increase remains likely, with the Chancellor himself having requested recommendations about how Capital Gains Tax could be reformed.
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