The recent government announcement might have left you confused on the impact that it will have on both your personal and professional life. This confusion is completely normal therefore, we are here to breakdown the key points to help you understand further.

In short, the budget begins the work of preparing for a new economy post COVID. Although there are challenging months ahead, the budget aims to provide the United Kingdom with the foundation for a stronger economy.

Economic forecast:

Firstly, let’s look at the overall economic forecast.

• A forecast from the Office for Budget Responsibility (OBR) shows that the economy is set to grow by 6.5% this year. In 2022, the economy is projected to grow by a further 6%, 2.1% in 2023, 1.3% in 2024 and 1.6% in 2025. They have also stated that it will take until the start of 2022 for the economy to return to its pre-pandemic size.
• Inflation is currently one of the key pressures affecting the UK economy with the OBR forecasting that it will be above 4% next year.
• A previous forecast carried out by the OBR estimated that unemployment would rise to 12% however, it is instead set to peak at 5.2%, down from the original forecast.
• Borrowing for the current financial year will be 7.9% of Gross Domestic Product (GDP) and is set to fall to 3.3% next year.

Business:

Next, let’s look at how the budget is set to impact on businesses.

• The government are going to extend the temporary £1 million level for annual investment allowance until March 2023. Previously, this was due to return to a permanent level of £200,000 after the 31^{st of} December 2021.
• There has also been an announcement of new, temporary business rate relief for eligible retail, hospitality and leisure properties in order to support these businesses. This will be for the 2022-2023 period. This means that if eligible, you can claim a 50% discount on business rates up to a maximum of £110,000.
• The scope of relief on R&D tax will now include cloud computing and data costs. This will incentivise greater investment here in the UK from April 2023.
• The recovery loan scheme was due to end on the 31^{st of} December 2021 however, it has now been extended until the 30^{th of} June 2022. The aim of this is to provide valuable support for smaller businesses whilst looking at opportunities to recover post-pandemic.

Personal:

Finally, let’s look at the key statements made in relation to our personal lives.

• The first key statement was regarding Universal Credit. The taper rate has been reduced from 63p to 55p, along with the increasing the work allowances by £500, this equates to be a tax cut worth more than £2bn. This follows on from the biggest ever overnight cut in benefits in early October and will kick in no later than 1st December 2021.
• From April 2022, the National Living Wage is set to increase to £9.50 per hour from £8.91 which is a 6.6% increase. The NLW has also increased for those in the following age categories: 21-22 years old, 18-20 years old, 16-17 years old and apprentices.
• Tax residents have been obliged to report to HMRC within 30 days of completion for any gains on disposals of UK residential properties which have been completed on and after the 6^{th of} April 2020. This has been similar for non-tax residents who have had to declare and pay the capital gains tax return within the same time frame. However, the Chancellor has stated that the deadline has now been extended from 30 to 60 days with immediate effect.

The plans that the Chancellor has laid out are all with the aim of creating a stronger economy and prepare for post-COVID. If you have any questions on what impact that this will have on your business, you can contact us here for a confidential chat. 

We also recommend that you follow us on all our social media where we will be covering some of these points in more detail over the coming days and weeks.