Now the dust has settled on Chancellor Rishi Sunak’s Autumn Budget 2021, we can reflect on what it means for Scottish businesses ahead of our own devolved Scottish Budget on 9 December 2021.
Economic outlook for the UK
The Office for Budget Responsibility (OBR) delivered good news for the UK on the whole as we edge closer to a post-pandemic era.
The OBR’s projections has UK GDP to bounce back at 6.5% growth by the end of 2021, up from the 4% growth previously suggested.
Long-term economic damage from the pandemic is now thought to be less severe (-2% rather than -3%) and unemployment rates significantly lower at 5.2% (5.4% in Scotland) than the gloomy 12.5% forecast.
It’s hoped this can translate into greater business confidence and help us gain further momentum in the economy in 2022 and beyond.
Autumn Budget 2021 delivers some good news on taxes
While many tax rises had already been announced in Westminster’s Spring Budget 2021, which will drag on operational costs and profits, there was some good news on the taxation front.
Planned fuel duty rises are frozen and air passenger duty on domestic flights is cut. So if you are on the road a lot, or travel by air to other parts of the UK, you will be better off than was expected.
Minimum wage on the rise
If you employ people on the minimum wage, you will have to budget for rises from 1 April 2022. This may be compounded for you by the 1.25% increase to National Insurance contributions already announced.
The headline rate for over-23s – known as the national living wage – will increase 6.6% to £9.50 per hour. There are also rises of between 4.1% and 11.9% for all other minimum wage bands for younger workers and apprentices.
This will bring more full-time workers within the scope of auto-enrolment legislation that applies to people between the age of 22 and state pension age, and earning £10,000 a year or more, driving up employers’ costs.
Devolved grants & levelling up
The waters are muddied by emergency funding due to COVID-19, but if that is disregarded, the devolved governments of the UK will receive the largest block grants since the mechanism was first agreed in 1998.
In this spending cycle, Holyrood will receive an extra £4.6 billion a year, taking Westminster’s total annual Scottish Government funding to £41bn.
In addition to this, the Chancellor announced the first round of bids from the levelling-up fund will be allocated.
This equates to £1.7bn of funding that will be invested in the infrastructure of everyday life. £170 million of this is earmarked for Scotland, which is proportionately more than the Barnett share. Aberdeen is one area lined up to benefit this side of the border.
Business rates (in England)
We watched big announcements on business rates in England with interest and hope Finance Secretary Kate Forbes announces something similar for our equivalent non-domestic rates.
Down south, the multiplier used to calculate rates is frozen for 2022/23 and revaluations will take place every three years, rather than every five.
There’s also a 50% discount to eligible retail, hospitality and leisure businesses (capped at £110,000 per business), and providing further support to businesses that invest in their properties in certain ways.
Here to help
We offer a range of business and personal services and if you wish to discuss in further detail how the above changes will impact you, email contact@thomasbarrie.co.uk or call 0141 221 2257.