In the House of Commons, Chancellor Rishi Sunak has this afternoon delivered the second Budget of 2021. Taking to the dispatch box while the nation continues to deal with the fallout of the COVID-19 pandemic, Sunak outlined his plans to prepare the UK for a new economy post-Covid.
This plan included lifting the economy and extending support for individuals, businesses and entire industries as we now work ourselves through an economy no longer supported by schemes like the Coronavirus Job Retention Scheme.
While the cost of inflation was expected to rise to as much as 4% in 2022, Sunak’s Autumn Budget announced a new 50% business rates discount for companies in the retail, hospitality, and leisure sectors, lasting for one year, as well as the government accepting the recommendation to make the living wage £9.50 an hour from next year.
But there are significant announcements from today’s Budget that will directly impact HR and payroll departments across the country. Speaking about employment, the Chancellor said, “Employment is up, investment is growing, wages are rising.” Stating in his speech that compared to February 2020, wages have grown by 3.4 per cent.
The Chancellor stated that unemployment is expected to peak at 5.2 per cent, while the National Living Wage will rise next April from £8.91 to £9.50 per hour.
The Budget has also announced today for one year a new 50 per cent business rates discount for the retail, leisure and hospitality sector. This marks a tax cut of almost £1.7 billion.
Here’s everything the Chancellor announced at the Autumn Budget that will impact HR and payroll teams:
National Living Wage will increase next year
The Chancellor confirmed that the National Living Wage would rise to £9.50 an hour, up from its current level of £8.91 – a 6.6% raise, or for a full-time worker, the equivalent of £1,000 over the course of a year.
What does this mean for HR and payroll teams? From April 2022, you must ensure that all of your workers are being paid fairly and in line with the updated government guidance.
Retail, hospitality and leisure sector to see new business rate relief
Firms in the retail, hospitality and leisure sectors will benefit from another year of business rates relief. They will be able to claim a 50% discount on their bills at up to £100,000, a tax break worth £1.7bn.
What does this mean for HR and payroll teams? The Chancellor added that, with this announcement, more than 90% of all businesses would see a discount of at least 50%, allowing them to invest more in their business.
Universal Credit taper rate to be cut
The Universal Credit taper rate will be cut by 8% no later than 1 December, bringing it down from 63% to 55%.
What does this mean for HR and payroll teams? For your staff who may also be on Universal Credit, for every £1 in earnings, Universal Credit will be reduced to 55p, not 63p – so claimants will keep 45p instead of the current 37p in every pound that they earn.
Fuel duty rise ‘on hold’
The planned 2.8p rise in fuel duty is to be cancelled amid the country seeing the highest pump prices in eight years. The price will remain, for the 12th year in a row, at 57.95p.
What does this mean for HR and payroll teams? With no change in fuel duty, drivers, and companies will benefit when filling up the vehicles as the duty increase has been frozen. However, prices at the pump are still at a record high.
Annual Investment Allowance extended
The £1m Annual Investment Allowance, a form of tax relief for British businesses designated for purchasing business equipment, will not end in September but will be extended to March 2023.
What does this mean for HR and payroll teams? This will make it more affordable for businesses to invest in new business equipment over the next 17 months.
48% rise in skills investment
The Chancellor announced £3.8bn would be invested in skills, an increase of 48% over this parliament. The Chancellor also set out a new, multi-million-pound national numeracy programme to improve maths skills for adults.
What does this mean for HR and payroll teams? For businesses, this investment will help you reduce the skills gap by allowing employees to further develop their skills through upskilling and training.