Chancellor Rishi Sunak unveiled his Autumn Budget which he says is designed to prepare the UK for an ‘age of optimism’. The government plans included changes to taxes, and spending on innovation, skills and welfare to help to the prosperity ‘of the whole United Kingdom’.
Capital Gains and Income Tax
A Capital Gains Tax reform was rumoured before the March Budget and was highly anticipated before this Autumn Budget.
However, there was no announcement on Capital Gains Tax or Income Tax, although this didn’t mean a reduction in taxes.
“No news isn’t always good news: higher taxes didn’t get a mention in the Budget speech, but unfortunately, you’re still likely to pay more tax next year,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.
“Part of this sleight of hand is about timing. The major tax hike had already been announced, with National Insurance and dividend tax both rising 1.25 percentage points in April 2022. The more you earn, the bigger an impact this will have, but NI will add £180 a year to the tax bill for a typical basic rate taxpayer earning £24,100.”
National Minimum Wage
The National Minimum Wage has increased to £9.50 from £8.91.
Innovation and Skills
The government unveiled a multifaceted effort to help innovation in the UK which included attracted overseas innovators and spending on UK business.
Research & Development
Rishi set out plans to help boost UK spending on R&D with £22 billion spending on tax credit reforms and increases to funds designed to help innovation such as the Future Fund.
Universal Credit
Universal Credit has long been a thorn in the side of the government. Today the government made changes to support working families by reducing the taper tax rate from 63% to 55%.
A single mother of two will be better off by £1,200 a year.
This was a more generous move than expected by the government.
Housing and Construction
The ongoing unsafe cladding issue was addressed with a 4% levy on property developers with profits over £25 million.
£11.5 billion is to be spent on 180,000 new affordable homes.
Energy Bills
Prior to the Budget, a MoneySuperMarket study found many consumers worried about their energy bills. Unfortunately, a speculated VAT cut to household bills was not delivered.
“We have found that nearly half (49%) of bill payers are concerned about being able to afford their energy bills this winter and that three quarters (74%) of this group attribute their worries directly to seeing their bills increase,” said Stephen Murray, energy expert at MoneySuperMarket.
Business Rates
The chancellor announced £7bn in Business rates reliefs focused on the struggling retail sector.
Education
The government has earmarked an additional £1.8 billion to help the poorest students’ recovery from the impact of the pandemic. Schools will receive £4.7 billion by the end of the parliament.
NHS
The chancellor has announced an additional £5.9 billion in funding for the NHS to help tackle the backlog of patient appointments.
International Aid
UK international aid is expected return to 0.7% by 2024/25, the end of the current parliament. This is an expectation that is a long way out so take it with a pinch of salt.
Welfare
£200m will be provided to families through Supporting Families schemes.
Devolved Administrations
Scotland, Wales Northern Ireland will receive additional funding £8.7bn per year.
Alcohol Duties
Changes to duties on UK manufactured alcohol were introduced to to help boost the industry with reductions on cider and sparkling wines.
A boost for pubs was provided with draft relief to help encourage people to drink in pubs instead of at home, as pubs are seen as a safer drinking environment.
A tax cut of £3bn was provided to the UK industry by the cancellation of proposed duty whiskey, beer and cider.
