Last week, the Chancellor of the Exchequer posed with his red briefcase before unpacking his Autumn budget in the house. There were many things unveiled, things that will be relevant for you, others that perhaps won't be. Have you seen bits and pieces which impact your home and work life? Let's take a look at the Autumn UK budget 2021 summary in regards to business, freelancers and the self employed.
NI & Tax Increases
Firstly, we already knew that tax rises were coming into play, however we now know that National Insurance contributions and dividend tax will increase by 1.25% from April 2022. If you are self employed, this means you'll need to know that dividend taxes will rise to 8.75% for those in the basic rate tax bracket, whilst those higher rate payers will pay 33.75%. Additional rate taxpayers will pay 39.35%. For National Insurance, contributions on profits between £9,568 to £50,270 will increase to 10.25%. Above that, you'll pay 3.25% on profits. Sunak has announced that he is committed to cutting taxes by the end of this parliament. What that looks like remains to be seen.
Extension To The Recovery Loan Scheme
Secondly, the Recovery Loan Scheme has been extended by six months. Eligible business can apply for financial support if they’ve been affected by the pandemic. It was going to be closing at the end of the year, however it will not close at the end of June 2022. However just over 5000 business have taken advantage of the scheme so far. How many will need this financial help during this six month extension?
The Annual Investment Allowance
The Autumn UK budget 2021 summary continues with an extension to the Annual Investment Allowance. This allows you to deduct 100% of the cost of some things you solely use for business, from your profits, before working out tax. This includes plant, machinery and even computers. This limit was increased to £1 million until the end of the year but will remain in place until March 2023. It;s the perfect time to invest in that machinery that you need.
If you are self employed or working freelance, you might do a bit of travel to visit various clients. You might work from a hot desk in the city one day a week or travel by rail to attend meetings or networking events. Whatever the reason for your travel, it's good to know that there are transport improvements coming. Transport in cities outside of London will be 'leveled up' with nearly £7 billion set aside for improvements. Expect the focus on this to be train, bus, tram and cycle projects.
Other notable areas in this UK budget 2021 summary include ‘green’ investment relief, an angel investor scheme outside of London and a focus on improving the UK's digital capabilities. Finally, there is also a rise in the national living wage, from £8.91 per hour to £9.50.
In conclusion, what do you think of what Rishi Sunak has laid out? What would you say is the most important part of the UK budget 2021 summary for you? You can read more about the budget in detail on the Government website here.