Experts from Inspire – our Accountancy Partner – and Frettens Solicitors – our Legal Partner – give their top takeaways from this year’s Budget.

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Chris Downing, Director, Inspire:

“This was a departure from previous Conservative Budgets.

“The message had previously been to ‘fix the roof when the sun was shining down’, playing down debt and reducing the deficit.

“Perhaps with an eye on the ‘levelling-up’ agenda and the converted Labour voters, when Chancellor, Rishi Sunak, spoke he had news that the Covid impact was not as bad as first thought.

“The message was that he will invest that money to bring growth in the future and try to grow the economy to repair the Covid impact (not forgetting the net debt that existed pre-Covid).

My Top Five takeaways:

1. General economic picture – when the Chancellor delivered his second Budget of 2021, he had news that the Covid impact was not as bad as first thought:  The UK economy is forecast to return to pre-Covid levels by 2022, with annual growth set to rebound by 6.5% this year, followed by 6% in 2022.  However, inflation in September was 3.1% and this is likely to rise further to average 4% over the next year…could this mean interest rises to come?
2. Research & Development – R&D tax reliefs will be expanded to include cloud computing and data costs.  Further reforms will ensure that R&D funding is spent by companies within the UK, rather than overseas.
3. Annual Investment Allowance – The first £1m of capital spend will continue to attract 100% tax relief up until March 2023.
4. Although this was technically announced earlier in the year, it was reaffirmed, Corporation Tax rises from April 2023 will have a fundamental impact on business owners: Companies making more than £250k profit will pay 25% Corporation Tax, an increase of 6% from now (profits up to £50k will remain at 19%, with a tapered rise to £250k)
5. In a slightly surprising move, there were no changes announced to Capital Gains Tax, Inheritance Tax or Stamp Duty Land Tax. Conspicuous by their absence, we can only expect that we can expect further changes next time around.

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Karen Edwards, Head of Corporate and Commercial, Frettens Solicitors:

“Many of the details of the Chancellor’s Budget were leaked in advance.

“My colleagues have been busy poring over the details and here are some of our thoughts.”

Our Top Four Takeaways:

1. Affordable homes

The Chancellor announced that a £24bn budget will be used for a ‘multi-year housing settlement’.

£11.5bn of this will be used to build up to 180,000 ‘affordable homes’ and £1.8bn of this was pledged to bring brownfield into use.

Property Partner Oonagh McKinney says: “We have seen, and indeed continue to see, unprecedented demand in the local housing market over the past 18 months, in particular from first time buyers.

“The Stamp Duty holiday has caused a boom in the residential property market, but lack of stock has pushed prices beyond the reach of many in Dorset.

“Contribution towards affordable housing development is much needed.”

2. Unsafe Cladding

The news that £5 billion will be pledged to help remove unsafe cladding will come as welcome news to residents of affected blocks, in particular those left in limbo unable to sell.

Leaseholders will be crossing their fingers that they will be able to get quick access to these funds.

The works will be partially funded by a residential developer property tax of 4% for qualifying businesses with profits of over £25 million.

“Whilst this is a step in the right direction, it is still apparent that individual leasehold owners will still be footing substantial bills for cladding that was not of their doing,” says Property Litigation specialist Will Bartley.

“It is also still unclear as to when this will be implemented and how quickly the funds will be distributed to assist those in need.”

3. National Living Wage

The National Living Wage is set to rise from April next year. Over-23s will see their hourly rate increase from £8.91 to £9.50.

Employment Partner Paul Burton says: “Employers with staff under the age of 23 should be mindful of regularly checking that staff are in the correct pay bracket and when a change is announced anyone paying staff at or around minimum wage want to review to ensure that the correct rate is being paid.

“The cost of failing to do so can be significant. Even a relatively small number of staff underpaid for just a few weeks can result in a costly collective sum.”

Paul outlines the new rates here.

4. Business Rates

A range of measures were announced with the aim of supporting these hard-hit businesses, including a business rates improvement relief and the freezing of the business rates multiplier.

The new 1 year 50% business rates discount will be introduced for companies in the retail, hospitality and leisure sectors.

Back to me, then – Corporate & Commercial Lawyer Karen Edwards – and my comment is:

“Dorset’s economy features a huge number of leisure and hospitality businesses who have been hit extremely hard by the pandemic.

“Many of these businesses were hoping for drastic reform, and the opposition is in favour of scrapping business rates.

“These announcements will hopefully help some of these businesses that are a crucial part of the local economy.”