On Wednesday 27th October 2021, Rishi Sunak will deliver the Autumn Budget 2021 – his third Budget as Chancellor of the Exchequer. He is expected to announce a series of measures to help the UK’s economy recover from the devasting impact of the coronavirus pandemic. Keep reading for predictions and rumours of what may arise in the Autumn Budget 2021.
When is the Autumn Budget 2021?
Chancellor of the Exchequer Rishi Sunak will announce his Autumn Budget 2021 on Wednesday 27th of October 2021. It usually starts early afternoon, so if you’re interested in following it live, we recommend tuning into the BBC News website for 1:00pm.
When unveiling the date of the Autumn Budget, Rishi Sunak said:
“Despite the worst economic recession in 300 years, we have not only got people back into work through the Plan for Jobs but continued to deliver on the priorities of the British people.
At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.”
What happened in the last budget?
Unsurprisingly, the Autumn Budget 2020 was originally scheduled for Autumn in 2020. However, due to the coronavirus pandemic, it was delayed until March 2021, and was referred to as the March 2021 Budget.
Throughout the March 2021 Budget delivery, Rishi Sunak reiterated the devasting impact that the coronavirus pandemic was having on the UK’s economy. Hundreds of thousands of workers had lost jobs, and the economy had shrunk by 10% – the most significant decline in 300 years. Some of the key measures that were announced in the March 2021 Budget included:
- An extension to the Coronavirus Job Retention Scheme and the Self Employment Income Support Scheme (until September).
- Significant investment into the vaccine rollout (upwards of £1.6 billion).
- A freeze to the tax-free personal allowance of £12,570 for five years, starting from 6th April 2021.
- Corporation tax on profits exceeding £250,000 to rise from 19% to 25% from April 2023.
- The extension of the Stamp Duty holiday to the 30th of June 2021.
- Multiple tax breaks for businesses to help them during the pandemic.
- Restart grants worth up to £5 billion for businesses that were forced to shut due to the pandemic.
- A rise in the contactless payment limit to £100 later in 2021.
- £19 million invested into domestic violence programmes.
- £400 million to help venues impacted by the pandemic, including museums and galleries.
- £1 billion funds for the regeneration of 45 towns in the UK.
Please visit the government’s website for a complete list of the disclosures in the March 2021 Budget.
There has already been big news – the Health and Social Care Levy and a rise in dividend tax
On the 7th of September 2021, Boris Johnson announced a 1.25% rise in National Insurance Contributions (NIC) to help raise health and social care funds. This has been dubbed the new Health and Social Care Levy. A rise in dividend tax will also meet the increase in NIC, which will impact contractors with a personal service company (PSC).
For more information on the Health and Social Care Levy and the upcoming dividend tax increase, please read our blog: ‘The government has unveiled a health and social care plan that’ll see a 1.25% rise in National Insurance and dividend tax’.
Autumn Budget 2021 rumours
Capital gains tax
According to The Times, there are rumours that Rishi Sunak may announce a change in the capital gains tax rates. The threshold is currently frozen until 2026 (currently £12,300), but the rate may be amended later this month. The rumoured increase could see the current rates of 10% and 20% being replaced with a system that calculates tax based on a business’s profit.
Which! suggest that the government may look to increase both the National Minimum Wage (currently £8.91 per hour) and the National Living Wage (currently £9.30 per hour).
Interestingly, a couple of weeks before the Autumn Budget, the government announced that homeowners in England and Wales could benefit from a £5,000 grant to install heat pumps and move away from gas boilers. With climate changes becoming more and more of a global concern, more measures are expected to be announced in the Autumn Budget.
Freeze to pay
iNews predict the government will end a one-year pay freeze on public sector pay. This would impact over £1.3 million public sector workers, including teachers, police, firefighters and the armed forces. Those working for the NHS were exempt from the pay freeze, and the government handed them a 3% pay rise which was backdated (to April 2021).
The Low Incomes Tax Reform Group (LITRG) has asked the government “to consider pausing activity around the loan charge and to review the current loan charge situation”. Expected to generate upwards of £3 billion, the loan charge is a government policy that involves targetting those who have used loan schemes (disguised remuneration) and gathering the underpaid tax and National Insurance Contributions. It works by “adding together all outstanding loans and taxing them as income in one year.” The loan charge has come under plenty of scrutinies, and multiple bodies are fighting the government over its implementation.
Rachel McEleney, Associate Tax Director at Deloitte, has predicted that changes to inheritance tax are unlikely as it’s already “quite high by international standards”.
Rachel said: “at 40%, and we don’t expect this to change. The nil-rate band has been frozen at £325,000 since 2009/10, so IHT has already been increasing in real terms over time. Had inflationary adjustments not been suspended as a result, the nil-rate band would now be £417,000. Over that period, IHT receipts have more than doubled from £2.3 billion to over £5 billion with around 7,000 extra estates being subject to tax.”
£2 billion budget cuts
“These budgets were cut substantially in the 2010s, and a further round of cuts would be difficult to reconcile with the government’s stated objectives – particularly around ‘levelling up’.”
Earlier in 2021, guidance called ‘Working through an umbrella company’ was released to help temporary workers understand the umbrella company sector, how the payroll providers work, and identify the risks of using non-compliant umbrella companies.
More recently, guidance was published aimed at agencies and businesses that employ temporary staff (‘Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme’).
There are still calls for the government to help protect temporary workers from non-compliant umbrella companies, and multiple third parties are rallying for official government regulation of the umbrella company sector. There is a possibility that the government will unveil new information regarding umbrella companies in the Autumn Budget.
As a proud member of the Freelancer and Contractor Services Association (FCSA), our advice to contractors and freelancers is to use an FCSA accredited umbrella company. To achieve FCSA accreditation, umbrella companies undergo a series of rigorous assessments and audits, and they must prove they adhere to the FCSA’s Codes of Compliance. The FCSA has been setting compliance standards within the industry for multiple years, and they’re doing an excellent job.
Keep visiting the Churchill Knight blog for the latest news
The Churchill Knight blog is full of helpful information for contractors, freelancers and temporary workers in the UK. Please frequently visit to keep up to date with the latest news. Once the Autumn Budget 2021 is announced on Wednesday 27th October 2021, we will publish an article with the latest developments and the implications they will have on self-employed workers.
Founded by an IT Contractor in 1998, Churchill Knight has become one of the most respected contractor accountants in the UK. We’ve helped over 20,000 contractors with their accountancy requirements. As well as our accountancy services, we also have an industry-leading PAYE umbrella company and dedicated in-house personal tax department. Whichever service you choose, you can move forward with complete peace of mind. We are proud of the reputation we’ve built over the years, and our FCSA accreditation proves how committed we are to compliance within our sector. Keep reading…