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Autumn 2021 Budget roundup

Autumn 2021 Budget roundup - how are small businesses affected?

While last week's Budget failed to deliver any earth-shattering changes for small businesses, there were a few notable announcements. We looked at the key changes that could affect your business.

Perhaps the biggest headline grabber was the announcement to give companies in the retail, hospitality, and leisure sectors a 50% business rates discount. This prompted some discussion on our forum, with @IanSuth questioning 'Who is paying the 50% rebate?'.

'I guess the hope is that … this will fuel some of the empty stores to reopen, and the councils will receive at least some rates from premises not having rates paid at the moment,' replied @Paul Norman. 'I reckon this is a risk that was needed unless we want the remaining three shops in your High Street to close next week.'

Of course, this was just one of many changes that could impact your business. Here's our round-up of the most important announcements for SMEs - head to our 2021 Budget thread to tell us how these changes could affect you.

Business rates

Highlights:

  • After a long Business Rates Review, the Government has finally announced that the existing system will be 'made fairer', not abolished
  • The big news was a year-long 50% business rates discount for companies in the retail, hospitality, and leisure sectors
  • Businesses can make improvements to property and pay no extra business rates for 12 months under new business rates improvement relief
  • Businesses are being encouraged to adopt green technologies like solar panels under the green investment relief
  • From 2023, there will be more frequent revaluations of the business rates system
What does this mean to small businesses?

"Apart from the Covid reliefs, this is the biggest single-year cut to business rates in 30 years," said Sunak about the new 50% reduction for retail, hospitality, and leisure sectors.

This may be true, but many businesses had expected a bigger shake-up of the current system. Questions have been raised about whether these changes go far enough or are they just a sticking plaster for many struggling businesses?

And, with the reduction only in place for one year, there are also many uncertainties about what happens after that. Small businesses could be facing a tax hike when the rates return to normal in April 2024.

More information about business rates changes

Read the Business Rates Review final report in full.

The National Living Wage

Highlights:

  • For people aged 23 and over the National Living Wage will rise from £8.91 to £9.50 an hour
  • This is an increase of 6.6%
  • The increase amounts to an extra £1,000 a year for a full-time employee working 35 hours a week
What does this mean to small businesses?

This additional cost of wages could put a strain on small businesses, especially at a time when they're recovering from the effects of Covid.

Research by the Federation of Small Businesses shows that one third of small businesses will have to increase their prices to pay the bigger wage bill. And 15% said it would affect their ability to hire.

More information about changes to the National Minimum Wage

Find out about the current minimum wage rates on the Gov.uk website and check what you need to do to employ someone to work for you in this step-by-step guide.

Research & development

Highlights:

  • A new target has been set to spend £20bn on R&D in the 2024-25 tax year (this is in addition to R&D tax reliefs)
  • As a result, the total public investment in R&D will increase from 0.7% of GDP in 2018 to 1.1% by the end of the current Parliament
  • R&D tax reliefs have expanded to include cloud computing and data costs
What does this mean to small businesses?

While the Chancellor spoke about putting 'unprecedented funding' into innovation, the backstory paints a slightly different picture. A previous commitment to spend £22bn a year has been pushed back and now won't be met until 2026-27.

But there's more funding for existing research funding bodies that benefit small businesses. This includes a £400m boost for Innovate UK, the UK's innovation agency, which gives grants to promising technologies, by 2024-25.

More information about business rates changes

Read more about the R&D Budget announcements on this Guardian round-up and search for funding opportunities on Innovate UK.

Angel investor scheme outside London

Highlights:

  • The British Business Bank's Regional Angels Programme is an angel investor scheme for small businesses across the UK
  • It aims to help reduce regional imbalances in access to early-stage equity finance
  • The Chancellor has pledged the programme £150 million
What this means to small businesses

This investment has been made to help small businesses outside of London to access early funding, helping them to get off the ground and grow.

It's part of a wider government plan to 'level up' across the country and move away from a system that favours those in London and the South East. So far, 85% of businesses that have benefitted from the scheme come from outside London.

More information about the angel investor scheme

Find out more about The Regional Angels Programme.

Roundup of other announcements for small businesses

  • Recovery Loan Scheme - Six-month extension until 30 June 2022. Businesses can apply for a loan of up to £2 million and they will be 70% backed by the government
  • Simplifying and reducing alcohol duties - The main duty rate, which is used to calculate the duty based on drink type and alcoholic strength, will be cut from 15 to six, plus a new relief for smaller producers of alcohol
  • Fuel duty is to remain frozen at 57.95p per litre for 2022-23
  • Levelling Up Fund of 4.8bn to tackle regional inequality
  • The £1m Annual Investment Allowance will be extended to March 2023, allowing you to deduct the value of certain items from your profits before tax
  • From April, National Insurance rates for both employees and the self-employed will rise by 1.25%
  • The Corporation Tax rate will increase to 25% from April 2023. While this only applies to companies with an annual profit of more than £250,000, fast-growing SMEs need to keep it on their radar
How has the Budget affected you?

Which announcements do you expect to have the most impact on your business? Whether the effects will be good or bad, tell us more in the comments below or head over to our 2021 Budget thread and join the discussion.

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