On Wednesday 27th October, the Chancellor of the Exchequer, Rishi Sunak, presented the second UK Budget of 2021 to Parliament. The budget covers key areas such as a minimum wage increase, cuts to the Universal Credit taper rate and half price business rates for the retail, hospitality and leisure sector.

Minimum Wage - From April 2022, the minimum wage (also known as the National Living Wage) for those aged over 23 will increase by 6.6% from £8.91 to £9.50 an hour. This increase means that full-time workers will get an extra £1,074 a year before tax. Minimum wage rates are also set to increase for younger workers and apprentices:

  • 21 to 22-year-olds: Increase from £8.36 to £9.18
  • 18 to 20-year-olds: Increase from £6.56 to £6.83
  • Under-18s: Increase from £4.62 to £4.81
  • The Apprentice Rate: Increase from £4.30 to £4.81

Universal Credit - The Universal Credit taper will be reduced from 63% to 55%, a total cut of 8%. This is set to take effect “within weeks” and no later than 1 December 2021.

Funding - Rishi Sunak confirmed that Scottish government funding will go up by £4.6bn, Welsh government funding will go up by £2.5bn and an extra £1.6bn will be given to the Northern Ireland Executive.

Business Rates Cut - Businesses in the retail, hospitality and leisure sector (including pubs, music venues, cinemas, restaurants, hotels, gyms and theatres) can claim a discount of 50% on their bills, up to a maximum of £110,000 – a tax cut worth almost £1.7bn. This, paired with small business rates relief, means that more than 90% of all businesses in these sectors will see a discount of 50% at the very least.

In addition, the Chancellor announced a new ‘Business Rates Improvement Relief’. This will allow businesses to make improvements to their property, such as installing security systems and air conditioning units at no extra charge. From 2023, it is expected that every single business will be able to make improvements to their property, and for 12 months, pay no extra business rates.

Pay Freeze Withdrawn - The pay freeze for public sector workers (including civil servants, members of the Armed Forces and teachers) will come to an end. From April 2022, public sector workers will be entitled to a wage increase, however the exact amount is yet to be determined.

Tax Relief for Museums and Galleries - Tax relief for museums and galleries will be extended to March 2024. Originally due to end in March 2022, it has been extended as exhibitions are starting to tour again after a hiatus due to the pandemic. In order to support in the recovery of theatres, orchestras, museums and galleries, the tax reliefs for all these sectors will be doubled from October 2021 until April 2023.

Interested in doing business in the United Kingdom? Find out everything you need to know about payroll, tax, social security, employee benefits, work permits, employment law and more in activpayroll’s Guide to Doing Business in the UK. This is available as a free PDF to download.

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