On a tightrope

Chancellor Rishi Sunak looked to pull off delicate balancing act when he stood up to deliver his Autumn Budget.

While trying to aid the economy’s post-pandemic recovery he was also grappling with the deficit and the highest figure of government borrowing since the end of the Second World War.

Then there was the growing spectre of inflation and its impact, along with soaring energy prices.

Add to that was the pressure to support the government’s green agenda, with the COP26 meeting in Glasgow looming.

The government also remained committed to its “high wage, high skill, high productivity” mantra.

So how did Mr Sunak do in pulling off his tightrope act?

Hard-pressed businesses in the retail, hospitality and leisure sectors will welcome the new 50 per cent business rates discount, along with the Small Business Rates Relief.

But really this is only a sticking plaster, it will only last for a year and it doesn’t tackle the bigger issue.

There is widespread agreement that the current business rate system really isn’t fit for purpose and some real change and different thinking is needed.

The chancellor has shown what that different thinking can deliver, with the overhaul of the alcohol duty system he announced, including the ‘draught relief’, which will deliver a 3p permanent cut in the cost of a pint.

While that and the freeze in alcohol duty announced delivered good news for pubs that have been under massive pressure, even before Covid struck, the raising of the national living wage will give the hospitality industry and other sectors another challenge to face.

The increase is welcome news for families, however for some smaller businesses it will add to their pressures and the fear is it could have an impact on job creation moving forward.

The national living wage is to go up to £9.50 an hour from next April, a 6.6 per cent increase from £8.91, which applies to workers aged 23 and over. For those aged 21 to 22, the minimum will go up from £8.36 to £9.18.

In other announcements, the scrapping of a rise in fuel duty is good news for businesses, including hard-pressed SMEs.

And, as predicted, any changes to income tax or movement or national insurance were not on the Rishi Sunak agenda.

Business is still assessing the impact of the September announcement that National Insurance contributions and dividend tax rates will increase by 1.25 per cent from April 2022, with the projected £12bn annual income ringfenced to pay for health and social care.

That followed the chancellor’s March announcement of an increase in Corporation Tax from 2023, with a new rate of 25 per cent. It came with plans to create a ‘Small Profits Rate’, for companies with profits of less than £50,000, which will be kept at the current 19 per cent level.

There was a warning for asset holders, as the chancellor expects to raise £985m from freezing inheritance tax bands, £990m from freezing the pension lifetime allowance, and an extra £65m from freezing the annual exemption on capital gains tax (CGT) in the next five years.

And the deadline for reporting and paying CGT after selling UK residential property has risen from 30 days to 60 days after completion.

• To discuss any issues raised for you by the Autumn Budget please call me on 01772 430000.