Chancellor Rishi Sunak presented the 2021 Autumn Budget yesterday, setting out a new series of financial initiatives and updates that will affect the UK economy. Here's what the announcements mean for small businesses.
Recovery Loan Scheme extended
The Recovery Loan Scheme, one of the financial measures introduced by the government in response to the Covid-19 pandemic, will be extended until 30th June 2022. Additional changes to the scheme, which had been due to close on 31st December 2021, will be introduced on 1st January 2022. These changes will affect who is eligible to use the scheme, the maximum amount of finance available and the guarantee coverage that the government will provide to lenders.
£1m level of Annual Investment Allowance extended
The level of Annual Investment Allowance will remain at £1 million until March 2023. This means that businesses will be able to continue claiming Annual Investment Allowance on qualifying assets up to the value of £1 million within a single year.
Business rate reforms revealed
From April 2022, a 50% discount in business rates of up to £110,000 will apply to retail, hospitality and leisure businesses in England for a year. This will follow the current 66% discount capped at £2 million, which will end on 31st March 2022.
More broadly, the Chancellor announced that a 100% improvement relief for business rates will be introduced in 2023. The relief will be reviewed in 2028, and from 2023, business rates will be reviewed every three years.
Additional R&D tax relief announced
Research and Development (R&D) tax relief will be made available for a wider range of business costs, including cloud computing and data. The Chancellor also revealed that from April 2023, more R&D tax relief will be available for UK projects.
Basis period reforms announced
Finally, it was announced that major changes to the Income Tax basis period rules will be introduced in April 2024. The basis period is the time period for which a sole trader or partnership pays tax each year. The future reforms announced this week will ensure that businesses pay tax on the profits they earn in the tax year, regardless of their accounting year dates.
Keen to learn more? Read the Autumn Budget 2021 in full on the government’s website.