Autumn Budget 2021: key points for sole traders and landlords

With many headline measures widely reported in advance, the Chancellor’s Autumn Budget and Spending Review statement on 27 October contained few surprises. However, Rishi Sunak believes his latest Budget and Spending Review will deliver a “stronger…

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With many headline measures widely reported in advance, the Chancellor’s Autumn Budget and Spending Review statement on 27 October contained few surprises.

However, Rishi Sunak believes his latest Budget and Spending Review will deliver a “stronger economy for the British people: stronger growth, public finances and employment”, while driving business growth. But how will changes announced by the Chancellor impact sole traders and residential landlords – and do business organisations share Sunak’s optimism?

Business rates

To support the post-pandemic high street recovery, the government plans to introduce a new temporary business rates relief in England for eligible retail, hospitality and leisure businesses for the 2022-23 tax year, at a cost of almost £1.7bn. More than 90% of businesses that qualify will have their business rate bills at least halved, up to a maximum of £110,000.

In addition, for the second year in a row, Chancellor Sunak has scrapped planned annual increases in business rates for all firms in 2022-23. Also announced, the government plans to hold a consultation on an online sales tax, which could enable “bricks and mortar” businesses (ie those with commercial/retail premises) to better compete with online sellers.

And, as announced in the Budget, businesses that improve their premises and thereby increase the building’s rateable value, will benefit from a new 100% improvement relief from April 2023.

Wage increases

From April 2022, the National Living Wage (paid to over 23s) will increase by 6.6% from £8.91 to £9.50 an hour, which is less welcome news for some sole trader businesses, but good news for their staff. And from April 2022, the National Minimum Wage will increase to:

  • £9.18 for workers aged 21 to 23
  • £6.83 an hour for 18 to 21 year olds
  • £4.81 per hour for 16 and 17 year olds and
  • £4.81 for apprentices below 19 years old (or older but in the first year of their apprenticeship).

The government will also reduce the Universal Credit (UC) taper rate from 63% to 55%, while the UC work allowance will be increased by £500 a year. Both will mean claimants will be able to hang on to more of the money they earn by working. The UK is estimated to have about 1.9m working households with low incomes, including many self-employed workers.

As previously reported weeks before the Budget, employee’s National Insurance contributions will increase by 1.25 percentage points for one year from 6 April 2022. The government says the additional money will go to the NHS and social care in the UK. 

Landlords and CGT

Many UK landlords will have been happy that the Chancellor did not increase Capital Gains Tax (CGT) in his Budget. Some commentators were predicting a reported “avalanche” away from buy-to-let had CGT increased, which had been rumoured in the lead-up to Sunak’s Budget statement.

Also announced in the Budget, with immediate effect, following completion, UK resident landlords and others now have 60 days to make CGT payments on UK property disposals subject to CGT (previously, the deadline was just 30 days). Otherwise, it was a quiet Budget for UK residential landlords.

Reality check

The Association of Independent Professionals and the Self-Employed (IPSE) warned that the largely optimistic messaging of the Chancellor’s latest Budget “does not chime with the reality for many self-employed people”.

IPSE CEO, Derek Cribb, said: “After the pandemic’s severe and disproportionate financial impact, this Budget provided an opportunity for the Chancellor to show his support for those who work for themselves. While the commitments on investment in infrastructure, innovation and skills are welcome, there’s far too little in the Budget that would directly support the self-employed.

“We’re grateful there were no new tax rises, but disappointed the Chancellor didn’t take the opportunity to simplify and reduce working taxes. Instead, we had a promise that tax would come down by the end of the Parliament, but no indication of exactly how. Overall, this Budget does nothing to reassure the UK’s 4.3m self-employed businesses.”

Autumn budget missed opportunity

Federation of Small Businesses National Chair, Mike Cherry, thought the Chancellor’s latest budget “delivered some measures that should help to arrest the current decline in small-business confidence.” However, “against a backdrop of spiralling costs, supply-chain disruption and labour shortages”, he didn’t believe there was enough to deliver the Government’s vision for a low-tax, high-productivity economy.

Cherry described inflation and forthcoming tax hikes as “clouds gathering”, with Government plans to increase National Insurance contributions next year something that also “threatens to seriously hamper our economic recovery.” He did welcome the Chancellor’s business rates reforms, but called for more help for small employers. 

The Forum of Private Business claimed that the Chancellor had “once again failed to address business rates properly, and missed the opportunity to create an immediate level playing field across small, big and online businesses.”

Ian Cass, Managing Director of the Forum of Private Business said: “The relief provided during the pandemic by postponing business rates saved many businesses. To save our high streets, those same businesses need that relief to continue. The 50% allowance for hospitality sector businesses is welcomed, and providing reliefs for green investment is fine, but many of the retail shops that communities rely on still face what they see as unfair business rates, and deferring the reviews until 2023 risks kicking the can down empty high streets.”

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Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

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