The Autumn Budget 2021: how does it affect your beauty business?
Chancellor Rishi Sunak has outlined his spending plans today (October 27) in the 2021 Autumn Budget, which outlines the Government’s plans for a post-coronavirus economy.
This is Sunak’s first Budget since the Government lifted Covid-19 restrictions during the summer, and he stated that his Budget will deliver a "stronger economy for the British people" and leave them in "no doubt" that the Government's plan is working.
“Employment is up, investment is growing, public services are improving, public finances are stabilising and wages are rising,” he said. “Today’s Budget doesn’t draw a line under Covid-19 – we have challenging months ahead – but it does start the work of preparing for a new economy post-Covid-19. A new age of optimism.”
The Chancellor told MPs the UK is recovering faster than its major competitors from the pandemic. He also acknowledged concerns about rising inflation and the cost of living, but said the Government would be responsible with public finances.
How the Budget 2021 will affect your beauty business:
“Before I set out our plans, let me say this. We on this side of the house are clear that reckless, unfunded promises to abolish a tax which raises £25 billion ever year are completely irresponsible,” said Sunak.
“It would be wrong to find £25bn each year in extra borrowing, cuts to public services or tax rises elsewhere, so we will retain business rates but with key reforms to ease the burden and create stronger high streets.”
Sunak said he will make the business rates system fairer, with more frequent evaluations every three years. This new cycle will be delivered from 2023. The Government is also introducing a new Green Investment Relief which will encourage businesses to adapt green technologies like solar panels.
He also announced that the Government is also introducing a Business Rates Improvement Relief from 2023, with businesses able to make property improvements and for 12 months’ pay no extra business rates. “Together with the new Green Investment Relief, we’re introducing investment incentives totalling £750m,” said Sunak.
Also, next year’s planned increase in the multiplier will be cancelled – “that’s a tax cut for businesses worth over the next five years £4.6bn,” said Sunak. There will also be, for one year only, a new 50% business rates discount for businesses in the retail, hospitality and leisure industries. This is a 50% discount up to a maximum of £110,000.
National Living Wage (NLW)
The National Living Wage paid to workers aged 23 and above will rise from £8.91 per hour to £9.50 per hour from April 1, 2022 – “for a full-time worker, that’s a pay rise worth over £1,000,” said Sunak. It is broadly consistent with previous increases. The National Minimum Wage for workers under 23 and apprentices will also rise.
Universal credit taper rate cut
The universal credit taper tax rate is being cut by 8% from 63% to 55% – “This is a tax cut worth more than £2bn pounds,” said Sunak. Changes like this usually take place in April but the Chancellor said this will be introduced within weeks, definitely no later than December 1.
Sunak said this would "benefit nearly two million families who will keep, on average, an extra £1,000 a year". He said a single mother of two, renting and working full-time on the National Living Wage will be better off by around £1,200, and a couple, renting a home with their two children – one working full-time, the other working part-time – will be better off by £1,800 a year.
Sunak said that the changes in eligibility criteria for the Scale-Up Visa system will make it quicker and easier for businesses to bring in highly-skilled individuals. “It is all part of our plan to make our visa system for international talent the most competitive in the world.”
UK economic growth
Recovery from the pandemic could come faster than expected. Sunak said the Office for Budget Responsibility (OBR) has revised its forecasts for UK economic growth, with gross domestic product (GDP) set to expand by 6.5% this year compared to the 4% it had forecasted in the March 2021 Budget. This is below what the Bank of England expects, which is a predicted growth of 7.4%.
The Chancellor said inflationary pressures are affecting the UK economy, with the OBR forecasting that inflation will average 4% next year. He said the pressures are global in nature and are “impossible for us to address alone”. However the Government will act to support households.
Other key things to note:
- The planned rise in fuel duty will be cancelled
- Scottish Government funding is up by £4.6bn, Welsh Government funding by £2.5bn, and £1.6bn for the Northern Ireland Executive, via the Barnett formula
- £24bn is earmarked for housing: £11.5bn to build up to 180,000 affordable homes, with brownfield sites targeted for development; £5bn for the removal of unsafe cladding for the highest risk buildings.
What do you make of the Budget 2021? Comment below.