Chancellor of the Exchequer Rishi Sunak holding a red case in front of 11 Downing Street

Contents

  1. 1. Annual Investment Allowance (AIA) extended
  2. 2. 50% rate relief for retail, hospitality and leisure
  3. 3. Tax relief for creative and cultural industries
  4. 4. Business improvements rates relief
  5. 5. R&D tax relief
  6. 6. Capital Gains payment window extended
  7. 7. Summary

Autumn Budget 2021: Key stats for small businesses

October 29, 2021
The famous red briefcase was held up outside of 11 Downing Street earlier this week, marking the announcement of the government's 2021 Autumn Budget.In the hour-long speech, Chancellor of the Exchequer Rishi Sunak outlined the government's ambitions for the post-Covid economy, with the tax cuts and investments centred on streamlining economic growth.Although it's safe to say that understanding the Budget at first glance is no easy feat, knowing exactly what the proposed changes are is crucial to understanding how they could affect you and your business.We've summarised the main points due to affect small and medium-sized enterprises, and what these changes mean for your small business.

Annual Investment Allowance (AIA) extended

The government has announced an extension of the temporary £1m level of the Annual Investment Allowance (AIA) to March 2023.The extension, from £200,000 to £1m, was initially planned to end on 31st December 2021. However, in his speech, the Chancellor remarked that "now is not the time to remove tax breaks on investment," and instead announced that £1m in AIA would now be available to business owners until 31st March 2023.The Annual Investment Allowance offers UK businesses tax relief on most 'plant and machinery' items that are intended to be used for business purposes only.AIA can be claimed on expenditure that would otherwise be eligible for writing down allowances (WDA), a scheme that offer tax relief on the same items but instead is spread over a number of tax periods.By allowing businesses to claim up to £1m in AIA, the government is encouraging business owners to invest in their businesses now, all the while simplifying the tax relief process and aiding cash flow.

50% rate relief for retail, hospitality and leisure

The retail, hospitality and leisure sectors were undeniably the hardest-hit by the pandemic, with lockdowns leading to widespread business closures, and restrictions resulting in a massive loss of revenue.With the intention of breathing life back into local high streets, the Chancellor announced that for one year the retail, hospitality and leisure sectors will receive a 50% business rate cut for up to £110,000. As a result, over 90% (approximately 400,000) businesses in these sectors can expect to receive significant discounts on their business rates bills between 2022-23.Overall, this rates relief is expected to be worth almost £1.7bn.

Tax relief for creative and cultural industries

As another sector that took a blow in the pandemic, the Chancellor has announced a tax relief of up to 50% for theatres, galleries and other cultural organisations.Jumping from the current rate relief of 25%, the Chancellor states that this relief is to be worth almost £250m, and will last for two years and five months from the 27th October 2021.Moreover, the Chancellor has also set aside £850m to invest in museums, galleries, libraries and local culture, with the British Museum, Tate Liverpool and York Railway Museum listed as just some of the recipients in the Chancellor's speech.

Business improvements rates relief

There's also some good news for businesses looking to adopt a green business approach. As called for by the Federation of Small Businesses, the Chancellor announced an investment relief intended to "encourage businesses to adopt green technologies".The Chancellor also announced the introduction of the 'business rates improvement relief,' a scheme that invites business owners to make property improvements without paying any additional business rates for 12 months.Although these initiatives won't be introduced until 2023, these incentives are expected to add up to £750m.

R&D tax relief

After announcing an investment of £22bn into research and development, the Chancellor made it clear that innovation was a priority for this government. However, Sunak expressed concerns that the current tax reliefs were not "fit for purpose," and that despite the UK having the second highest spending on R&D tax reliefs in the OECD, UK business investment in R&D is less than half the OECD average.To increase investment in research and development, the Chancellor announced that the government would be broadening the scope of the tax credits to include cloud computing and data costs, better reflecting "how businesses conduct research in the modern world" — a welcome change for software-heavy start ups.

Capital Gains payment window extended

From the 27th October 2021, the deadline for residents to report and pay Capital Gains Tax after selling a property has been extended to 60 days, giving those selling properties extra time to report and pay Capital Gains Tax. (You can declare and pay your tax via the link here.)

Summary

As efforts to recover the economy begin, the Budget offers small business owners ample insight into the financial opportunities that are open to them, whether it's a decision to claim tax relief on data costs or investing in business infrastructure and subsequently claiming AIA.If you're not sure what the Budget announcements mean for you and your business, you're in luck — we'll automatically optimise your tax returns, and our accountants are always on hand to offer tax-savings tips to help you get the most out of your money.
Steve Anderson
Steven AndersonSenior Accountant

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