Oct 18

Oct 18 What will be in the Spending Review for small businesses?

The Chancellor, Rishi Sunak, will be setting out the Spending Review on 27 October 2021 looking at spending for the next three years at a time when the UK economy battles inflation and supply chain issues. It is fully expected that Sunak’s priority will be to control the UK deficit rather than cutting taxes. What will be in this review that impacts small business?

Will fuel duty stay frozen?

In March this year, the government announced fuel duty will be frozen at 57.95p for the eleventh consecutive year.

If there is no specific mention of the fuel freeze in the Budget, this means fuel duty will indeed rise.

‘Plan for Jobs’ extension

The Chancellor announced before the budget a £500 million Plan for Jobs extension to help people back into work.

The Kickstart Scheme will now continue to March 2022, last applications accepted on 17 December 2021.

The government funded scheme offers a young person aged 16-24 and on Universal Credit a six-month work placement.

The government has also extended the £3,000 incentive for every apprentice you hire until 31 January 2022.

Further details will be provided at the Budget on 27th October 2021.

Will the VAT rate for hospitality and tourism stay low?

There is currently a reduction to hospitality and tourism VAT as a result of the pandemic. The VAT rate was initially dropped to 5%, and started to rise back up on 1 October to 12.5%. It is due to return to the pre-pandemic 20% from April 2022.

Will the government continue to support the industry as the it recovers post pandemic?

Will capital gains tax finally rise?

The Office for Tax Simplification (OTS) recommended in 2020 that capital gains tax should rise in line with income tax.

Capital gains tax is a tax on the profit of an item sold that’s increased in value. It’s the gain that’s taxed, rather than the amount of money received.

The OTS recommendations, if implemented, would see the tax rate on capital gains rise to 20 per cent for basic rate taxpayers. The rate for higher rate taxpayers would rise to 40 per cent.

During the March Budget, the government froze the threshold at which you start paying capital gains tax at £12,570 until 2026. Keep an eye out for any further changes to the tax on 27 October.

Help to Grow: Digital to launch

The government’s Help to Grow scheme for businesses with employees was launched in March. The scheme aims to “help you learn new skills, reach more customers and boost your profits and to kickstart the economy and businesses.

The Help to Grow Management Scheme, recently launched, is 90% government funded and aims to help businesses develop strategic and business management skills, via management courses hosted by business schools all around the country.

The Help to Grow Digital Scheme will launch this autumn. The opportunity is to access free advice on how technology can help your business, with a discount of up to 50 per cent on the costs of approved software, worth up to £5,000.

You need to have between five and 249 employees, be registered at Companies House i.e. be a limited company, and have been trading for 12 months or more.

The government says full details on eligible businesses and software will be revealed this autumn, so further information may be given on 27 October.