29-10-2021

The Chancellor of the exchequer, Rishi Sunak, delivered his Autumn Budget yesterday, the 27th of October as part of the governments confirmation and plans for the UK as we move away from the pandemic and build change after the exit from the European Union. The budget itself was titled “Protecting the Jobs and Livelihoods of the British People” and as you would imagine the majority of the speech was based around development, investment and the state of the nation.

The chancellor confirmed the Economy has shrunk by 10% mainly due to the pandemic in the latest period of reporting which could not be seen as a surprise but importantly, the very latest forecast and response from the Office of Budgetary Responsibility (OBR) paints a positive picture going forward.

Even though we have seen a decrease and have faced pressures, the OBR expect a return to pre-pandemic levels by the middle of next year, a lot earlier than was previously forecast and concluded there would be a faster and more sustained recovery expected. Inflation which was sitting at 3.1% in September is expected to reach an average of 4% over the coming year but is then expected to reduce with a target inflation of 2%. The chancellor also confirmed that further challenges had been created through the price of wholesale fuel which has more than doubled in price.

On a positive note however, the chancellor was able to confirm there has been a 3.5% real time wage increase and unemployment which was expected to reach a forecast level of 12% has been revised to 5.2% and with the increased speed of recovery, the UK International Aid contribution is expected to return to 0.7% by 2025.

This newsletter will confirm the key bullet points presented by the chancellor within the budget and we’ll then go through what this means to payroll, both in respect of direct announcements, confirmations through other statements along with further changes expected in 2022/21.

Key spending announcements

  • Continued investment in Healthcare and the NHS, with £177bn by the end of the current parliament.
  • £3.8bn for improvements and new prisons
  • £300m for start for life programs
  • £4.7bn by 2024/25 for schools
  • £200m for football pitches
  • £560m for youth services
  • £1.7bn for infrastructure including road sand transport
  • £800m for museums, libraries and areas within culture

The chancellor also confirmed at this point a further extended period of tax relief until 2024 for culture

  • Funding for innovation (R & D) - £22bn by 2026/27 – focused on UK activity
  • Funding for the 3 devolved nations will me increased beyond the Barnet formula for 2022

Other announcements

The chancellor confirmed that through the Home Office eligibility for the High Skilled “Fast Track” visas have been outlined for expected application in 2022/23.

Continuing the discussion on skills, the chancellor confirms more funding for further Education and Skills in the UK, focusing on technical skills and pledged £3.8bn.This would focus mainly on:

Transport

With shipping, the chancellor confirmed changes to the Tonnage Tax for ships flying the “red ensign” – the British merchant maritime flag and in line with many areas of the budget this is to assist in stimulating UK business.

As part of the budget, the government also confirmed in aviation a Lower passenger duty (APD) from 2023 for UK domestic flights. The key reasoning was again business stimulation, but also to assist in boosting regional airports along with further support to UK airports for a further 6 months. On the contra to this there will also be a new “ultra-long-haul” band of APD for locations with Capitals over 5500 miles from London.

Further announcements

Corporation Tax increases announced in the March 2021 budget were confirmed along with retaining the 3% surcharge. With respect to business rates, the chancellor was very clear that businesses in the UK had, and in some cases continue to find trading difficult as the country tries to return to relative normality. He confirmed and promised more regular re-evaluations, and these were announced to be carried out in the future every 3 years. The chancellor also spoke of more support for one of the hardest hit sectors and announced a further period of 50% discount on business rates for entertainment, leisure and hospitality.

Alcohol

The budget included an announcement confirming a full re-work of alcohol duty from 2023 now the UK is out of the EU. The basis of the changes was:

  • Reducing the number of rates from 15 to 6
  • New rates based on the alcoholic strength of drinks
  • Small producer relief where products are less than 8.5%
  • An end to sparkling wine rates
  • Announcement of a “draught relief” – lower duty for pubs selling draught alcohol – cutting 5%

It was also confirmed there would be no increases to Alcohol duty in 2022/23.

Final announcements

The chancellor confirmed of the end of the temporary Public Sector pay rise process which has meant a short-term freeze on increases. The removal brings back “fair pay rises” over the next 3 years in line where possible with private sector levels of increase.

Prior to the final announcement, Rishi Sunak confirmed the Government are committed to reducing tax by the end of the current parliament.

It has become the norm when it comes to Rishi Sunak’s budget speeches that we get an unexpected “nugget” of positive change! For this budget it was based on changes to the Universal Credit Taper. The changes mean:

This is expected to be introduced quickly by the 1st of December 2021.


"When setting up a Shared Service Centre, The Learn Centre played a key role in our award winning Payroll Academy, delivering a blended learning experience combining both classroom based training and an e-learning solution. The course delivery, the training materials and overall learning experience was excellent."

Michael Stevenson
Payroll Manager at Queen's University Belfast

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