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Autumn Budget 2021: Predictions for businesses

Our Audit, Assurance & Advisory team look at what measures the Chancellor, could, should and should not introduce in his Autumn Budget.

Measures the Chancellor could announce

Ahead of COP26 there will likely be a flood of further green economy announcements adding to those on heat pump grants and company disclosure requirements. These may include new schemes for solar panel installation (such as a Government-funded scheme to enable homeowners to borrow against the cost of purchasing the equipment), help for industry to reduce energy consumption (as most measures to date have focused on homes) and increased taxes on the worst polluters.

The Government will introduce some short-term visa schemes to address the shortage of labour in certain sectors. I fully expect these to be slipped through so as not to anger some voters. However, there is a desperate need in a number of industries for more overseas workers to fill the gaps in skills which we are currently experiencing. We would expect this to be announced along with more funding for training people already in the country in the areas where staff are needed.

During a number of announcements made in the early days of the pandemic, the Chancellor made it very clear that he wants everyone to contribute equally – this was particularly levelled at those in receipt of the self-employed income support scheme, as they do not pay National Insurance Contributions to the same level. I fully expect an announcement on this to be equalised (or a consultation to that effect). The Chancellor could also look to change the taxation on dividends to equalise that form of remuneration – this could be seen as unfair as dividends were not covered by any of the Covid support schemes.

Ahead of COP26 there will likely be a flood of further green economy announcements.

Measures the Chancellor should announce

Despite already saying there will be no rates reform, the Chancellor should consider a consultation on proper reform of the commercial rates system so that a fair tax is raised from occupiers of commercial properties (shops, factories, offices, warehouses, and logistic centres) that reflects the profit an occupier can earn from the property. The Government has consulted on this for many years and should now introduce a new system that adjusts mismatches such as the position for some retailers where the rates liability is greater than the rent payable. Reform will help reinvigorate our high streets and town centres, bringing life back to areas hit hard by the pandemic.

Government should introduce green incentives for landlords – over 40% of UK homes are rented. The Government needs to ensure that landlords improve the energy efficiency of these homes if the UK is to be carbon zero by 2050. While the funding may not be available to make grants to landlords, a reduction of VAT to 0% (from 20%) on any works to improve the energy efficiency of a home (which can be easily measured by filing of EPC certificates pre and post the works) for a certain timespan (say three years from April 2022) will encourage landlords to get on with the work – and reduce carbon emissions from these properties, as well as reducing energy bills for tenants. A ‘win- win’ for the Government that they can now enact as they are not trapped by the EU legislation governing VAT.

They should also introduce proper incentives for Greentech – including enhanced research and development credits and a green investment relief scheme. The Government should be more inventive in its efforts to reach net zero by 2050 rather than just giving money away for schemes which (as previous schemes have shown) may not work. While grants for heat pumps are a good initiative, the current generations of heat pumps are very expensive and, in many cases, do not allow for heating and hot water to be produced at the same time – hence they are not a direct replacement for gas boilers. Increasing investment in Greener companies and incentivising companies further to develop green technology is the only way we can meet this ambitious target.

The health and safety levy is another tax on jobs – there is already national insurance and the apprenticeship levy. Adding in another tax without reform of the apprenticeship levy (which is underused by those who need it most) could prove counterproductive so we are hopeful that there is some reform here to make the funds easier to access for those who could use it best and help skill up the country.

Finally, they should consider a Government-administered fund to allow private companies to convert part of their Covid debt into equity-funded through private investors taking equity. This will de-risk the Government (as, ultimately, they are the guarantor for most Covid loans), reduces the debt burden for the company and puts privately held funds into circulation.

Government should introduce green incentives for landlords – over 40% of UK homes are rented.

Measures the Chancellor should not announce

Government should not make any wholesale changes that will impact investment in small companies. This will include negative changes to Business Asset Disposal Relief (known previously as Entrepreneurs’ Relief), Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and similar. The country needs continued investment in these entities and making any large changes will have a huge impact on people making these investments. If he wanted to further encourage such investment, the Chancellor could relax the eligibility of SEIS and EIS qualifying businesses in areas where more investment is needed (Greentech, high street regenerations, etc).

Announce any changes to tax rates which take effect immediately – this has happened in the past and creates chaos for anyone who has planned changes. Any announcements need to be made with enough time that individuals and companies can change their plans to mitigate such changes and, in many cases, take advantage of the positive changes.

Would you like to know more?

If you would like to discuss the above or how it may affect you and your business, please get in touch with your usual Blick Rothenberg contact or one of our experts whose details are listed on this page.

For press enquiries, please contact David Barzilay using the details on this page.

For more information and predictions please visit our Autumn Budget 2021 hub.

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