United Kingdom: Autumn Budget 2021 – Biggest rates cut in three decades

published on 5 November 2021 | reading time approx. 1 minute

UK Autumn Budget 2021 – Chancellor Rishi Sunak resisted temptation to raise taxes to start paying for the emergency support schemes that kept so many businesses afloat during the pandemic in 2020/21.

Instead, Sunak continues to bask in the warm glow reserved for generous chancellors following his latest Autumn Budget speech, thanks largely to cutting the Universal Credit taper rate by 8 per cent, bringing it down from 63 per cent to 55 per cent, from 1 December 2021 at the latest.

 
Sunak also boosted struggling businesses with premises by revealing a five-point plan to retain and revamp business rates in England, starting with cancelling the multiplier for 2022/23 and confirming revaluations will take place every three years from April 2023, instead of every five years.
 

Beyond that, the Treasury took the unusual step of announcing several key measures well in advance of the day itself.

We already knew that several key tax rates and thresholds were frozen last spring, up to and including 2025/26, while news of the national living wage increasing by 6.6 per cent was already common knowledge long before today.

 
And, last month, we heard the triple-lock – a pledge to increase the state pension’s value by at least 2.5 per cent each year – would be suspended for a year as inflation continues to soar.

 
The Office for Budget Responsibility reckons inflation, as measured by the Consumer Prices Index, will average at 4 per cent over the next year.

 
Then, in the guise of the health-and-social-care levy, a 1.25 per cent National Insurance contributions (NICs) increase from April 2022 served to frustrate some company directors of owner-managed businesses, along with a corresponding 1.25 per cent increase in tax on dividend income.

 
Directors felt they’d already borne the brunt of limited government support during the midst of Covid-19; now, they’re being asked to cover the cost, through tax and NICs for themselves and their employees.

 
In his speech on 27 October 2021, the Chancellor also announced a residential property developers’ tax will be levied on corporate developers with annual profits of £25 million or more at 4 per cent.

 
Plenty of crowd-pleasers were also announced. Alcohol duties, for example, will be “radically simplified”, while pub landlords will be toasting the new ‘draught relief’ which lowers duties applying to draught beers and ciders by 5 per cent.

 
There was no real mention of climate change, aside from the surprising decision to introduce a cheaper, domestic band for air passenger duty – which will be sure to raise some eyebrows at next month’s COP26 conference in Glasgow.

 
As ever, of course, there were a handful of policy changes not announced in the speech but instead squirreled away in background papers.