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Tuesday, October 26, 2021

Autumn Budget 2021 and your small business

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By Timothy Adler on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Chancellor Rishi Sunak holding red briefcase, Autumn Budget small business concept

When is the Autumn Budget?

The Autumn Budget 2021 will be the second financial statement made by the Chancellor this year impacting small business, following the Spring Budget on March 3. Mr Sunak will present his Budget to Parliament on Wednesday, October 27.

How will Autumn Budget 2021 affect small business?

There have been so many leaks and press briefings with this year’s Autumn Budget 2021 ahead of tomorrow’s statement, it is fairly clear what some implications are for small business. What we don’t know yet are the Chancellor’s assumptions about the financial health of the economy.

>See also: Rishi Sunak eyeing online sales tax for the spring

Business rates reform?

The Government is not expected to announce reform of business rates for small business in the Autumn Budget 2021, as had been predicted.

Instead, only small-scale tweaks will be announced, marking the fifth time the Government has delayed publishing its plans for business rates reform — to the ire of some of Mr Sunak’s own backbench colleagues.

In March 2020, the Government announced a new consultation and said that the first part of the business rates review would be published in the tail end of 2020, with the second part in early 2021.

There have already been four delays to publishing the business rates review this year.

Independent retailers trying to make a go of things on the High Street complain they are penalised by unfair business rates, while out of town retailers in bigger retail parks pay less per square foot.

Plus the internet retailers rely on even cheaper distribution warehouses in the hinterlands, reducing their costs even further.

However, chancellor Rishi Sunak has not had enough time to consider the impact of a complete overhaul of business rates, according to the newspaper. Minor changes to business rates are expected to be announced, but “wholesale reform” has been shelved until a later date so ministers and officials can keep studying the problem.

In its party conference, Labour pledged to cut business rates in England for small business before phasing them out entirely.

John Webber, head of business rates at Colliers, called reports of yet another delay “massively disappointing” and warned that more delay will be a further hit to businesses, costing jobs and doing nothing to save the high street.

Webber reiterated that in current form business rates are just too high and that the multiplier at current levels of 51p in the pound is unsustainable for business.

“The chancellor, at the very least, should commit to a reduction of the multiplier to around 30p when he stands up at the end of the month,” said Webber. “That would provide a massive relief to businesses across all sectors.”

>See also: Recovery loan scheme to be extended for six months

National Living Wage increase

The National Living Wage, paid to those aged 23 and over, will rise to from £8.91 to £9.50 an hour – an increase of 6.6 per cent.

The rise in the National Living Wage has been recommended by the Low Pay Commission, the independent body which advises Government on the issue. The increase amounts to an additional £1,000 a year for someone in a full-time role working about 35 hours a week.

In 2019, the Conservative government pledged to increase the National Living Wage to about £10.50 per hour, making it the highest in the developed world.

And Labour has gone further, with its members pushing for a £15-an-hour wage, something which Labour leader Sir Keir Starmer refused to support.

Sunak will also announce on Wednesday that the National Minimum Wage for people aged 21-22 will increase from £8.36 to £9.18 an hour, while the apprentice rate will increase from £4.30 to £4.81 an hour. Changes to the National Minimum Wage are expected to benefit between 1.5 and 2.5 million people.

However, small businesses have warned that increasing wages too much will put jobs under threat as many low-paid sectors recover from the Covid blow.

One third of small businessees are planning to increase prices to pay for a bigger wage bill while 15 per cent said it would affect hiring, according to a survey by the Federation of Small Businesses.

Mike Cherry, chairman of the FSB, warned that any pay rise “must be affordable without jeopardising jobs”.

“Small firms are still trying to recover from the pandemic, and the last thing they want to do is to force customers to pay more or make cuts to staffing numbers,” he said.

National Insurance to rise

As announced in September, from April National Insurance rates for both employees and the self-employed will rise by 1.25 percentage points across earnings bands, raising around £12bn a year.

£150m fund for angel investment

The Autumn Budget 2021 will also announce £150m of funding for regional “angel investors” to help small business outside London access early funding, as part of the Government’s “levelling up” agenda.

Mr Sunak said: “We want to make the UK the best place in the world to start, grow and invest in a business.”

Further reading

Half of small businesses poisoned with ‘toxic debt’

The post Autumn Budget 2021 and your small business appeared first on Small Business UK.





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Timothy Adler, Khareem Sudlow