On Wednesday, the Chancellor, Rishi Sunak, announced the content of his budget for Autumn 2021 to the House of Commons. This budget focuses on the finances of the UK as the country tries to recover from the financial impact of the pandemic, as well as changes on the prices and different taxes.
State of the Economy
The Chancellor announced on Wednesday that the budget aims to not draw a line under Covid but to start the work of building an economy post-pandemic. He forecasts that the economy will return to pre-Covid levels by 2022. Unemployment is expected to peak at 5.2% next year, which is 11.9% lower than previously predicted. Also, wages have grown in real terms by 3.4% since February 2020.
As the country tries to recover, the Chancellor admitted that there are “challenging” months ahead due to the continuing COVID pandemic and rising inflation. Rishi Sunak promised plans to build « a stronger economy for the British people » following the crisis and also to put in plans to help people to get through this period and for businesses to survive.
What Changes in Prices and Taxes ?
The Chancellor announced that the planned rise in fuel duty is to be cancelled amid the highest pump prices in eight years. The tax would remain frozen at 57.95p a litre on petrol and diesel for the twelfth year in a row. Rishi Sunak also confirmed business rates are to be retained and reformed. A tax cut worth almost £1.7bn and with Small Business Rate Relief over 90% of all these businesses will see a discount of at least 50%.
The government is also introducing a new relief support green technologies. Until 2035, plant and machinery used onsite for renewable energy will be exempt from businesses rates altogether. Also, HMRC will allow data and cloud computing costs to be included in R&D tax credit claims. They also announced that overseas development costs will be restricted in some way. Finally, National Living Wage is set to increase next year by 6.6%, to £9.50 an hour. Earners will see the increases from 2022 with younger workers also set to see an increase.
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