The Autumn Budget (the second budget of the year) will be delivered this Wednesday, 27th October and comes on the same day as the Spending Review which sets out how government will fund public services for the next three years.
What is the Budget?
- The head of government finance, the chancellor of the exchequer delivers his or her Budget statement to MPs in the House of Commons every year.
- The budget outlines the government’s plans for raising or lowering taxes and includes vital decisions on what the government will spend money on.
- The leader of the opposition (this year Sir Keir Starmer) gives his response straight afterwards.
- A report is also published by the Independent Office for Budget Responsibility (OBR) who monitor government spending on the economy.
Will taxes go up or down in the Autumn Budget?
The government needs to lessen the gap between what is spent vs what is raised and with spending at an all-time high the obvious choice is to raise taxes. (In the year ending April 2021, the government borrowed £320bn resulting in the highest figure seen outside wartime and borrowing is expected to this year – circa £180bn more!).
However, the cost of living is increasing so the Chancellor may opt to cut taxes, such at VAT on energy bills. Graduates could be asked to begin paying back student loans earlier and a possible major change to the complicated alcohol tax system, which could translate into sparkling wine become cheaper has been speculated.
What is anticipated in the Autumn Budget 2021?
It is likely that the Autumn Budget will include details on support available to businesses and individuals to help recover from the economic effects of Covid19. Encouraging investment and jobs to poorer regions of the UK and of course details on changes to tax.
‘At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.’Rishi Sunak, chancellor of the exchequer
Could The Autumn Budget be a green budget?
Reducing the UK’s net greenhouse emissions to zero by 2050 to combat climate change can’t be a topic avoided. Hopefully, the offer to Homeowners in England & Wales of subsidies of £5k from next April to help replace old gas boilers with low carbon heat pumps, as part of the government’s Heat and Buildings Strategy, will be made clear.
Autumn Budget 2021 – look out for;
- Minimum Wage rate rise
- Energy Bills VAT reduction
- Alcohol Tax reduction
- Cigarette Tax hike
- OST (online sales tax) announcement
- Corporation Tax for the Banking Industry reduction
- Shake up of the present accounting year system (basis periods) starting with tax year 2023/24
- MTD for ITSA from April 2023
Do the changes announced in the Autumn Budget affect the whole of the UK?
No, some parts of the Budget, such as defence spending, will apply to the whole of the UK. However, education matters only affect England. This is because Scotland, Wales and Northern Ireland make their own decisions. Scotland has income tax-raising powers, which means its rates differ from the rest of the UK. The Scottish Budget
The Scottish government will publish its Budget on Thursday 9 December.
The Barnett Formula
According to a rule called the Barnett formula, if the government announces extra spending on areas that only affect England, the other nations get an equivalent extra sum of money to spend as they choose.
HB Accountants’ Budget summary
Look out for our round up of the Government’s 2021 Autumn Budget taking place this Wednesday 27 October 2021. Our Budget Summary will provide an overview of the key announcements arising from the Chancellor’s speech with informative comments to help you assess the effect that the proposed changes may have on you personally.
Don’t forget, we can help to ensure that your accounts are accurate and fully compliant. We can also suggest strategies to minimise your tax liability and maximise your profitability – Team HB is here to support you. If you would like to talk about how we can help you and your business flourish and grow, please feel free to contact the team on 01992 444466. We’re accountants for business and we’re here to help you survive and grow.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above