UK Budget 2021: How does the government budget announcement affect small businesses?

There has been a lot of speculation surrounding the UK Government’s Autumn 2021 budget announcement, with rumours across several topics, everything from cheaper pints, to a change in the National Living Wage. 

But what does it all mean for a small business owner? This article will cover the most important points you need to know from the 27th October announcement by Chancellor Rishi Sunak.

• Business rates
• Angel investor fund
• Levelling Up fund
• Fuel duty freeze

For high street shops and small companies that pay business rates, there has been a review of the system to support local organisations after the impact of COVID-19.

The main changes are:

• Evaluations of business rates for each business will occur every three years from 2023. This means the rates you’ll pay will be fairer as you’ll be evaluated more frequently.
• For the next 5 years, businesses that participate in ‘green investments’ and have equipment such as solar panels or wind turbines on-site will benefit from a new tax relief and will be exempt from business rates completely.
• You’ll be able to make improvements to your business property without paying higher rates for 12 months after you make the changes.
• And finally, for the next year, there will be a 50% business rate discount for retail, hospitality and leisure companies, as these industries were hit hardest by the pandemic.

Rishi Sunak announced on the Andrew Marr show earlier in the week that there would be a £150 million pot of funding for the British Business Bank. This would be spent on developing businesses in smaller regions outside of London and would act as a ‘Dragons Den’ style angel investment, allowing entrepreneurs to make their business dreams a reality.

The Levelling Up fund aims to inject cash into certain areas of the country to improve local town centres and high street regeneration. Today, Rishi Sunak announced the first local authorities that would benefit from the fund. This change also means that infrastructure and transport will be improved, which means there may be more work opportunities and potential contacts to be won for small businesses in the trades.

For businesses that are mobile or use company cars or vans, they will benefit from a freeze in Fuel Duty. The tax on petrol has been frozen again for 2022-2023 after the pump prices reached the higher cost in 8 years. With the freeze, a tank of petrol will cost £15 less per car, and £30 less for vans compared to the costs in the last decade. This means the average car driver will save around £1,900. 

If you’re using a vehicle for business purposes only, don’t forget that you can also claim mileage as an expense, saving your company even more money when it comes to your taxes.

It was announced that the National Living Wage will go up £9.50 (from £8.91) for those over 22 years old. For those who employ people under 22 years old, the minimum wage increases from £8.36 to £9.18. If you are a small business owner with an employee or employees, then it’s important to understand how this will impact your outgoings.

Many businesses in the much-affected hospitality sector were hoping that the reduced VAT rate of 12.5% would be extended past March 2022. The Government created the reduced rate to help businesses bounce back after the pandemic but there was no mention of a further extension in the Chancellor’s speech, which many businesses were eager to see.

If you’d like to read the full 2021 UK Budget Autumn Spending Review details you can do so here. And if you are looking for support with your business finances, then you can find out more about how the Countingup app can help you budget, categorise your expenses and even give you tax estimates year-round. Find out more here.