Views on the Autumn Budget and Spending Review 2021 Live Webinar
Alvarez & Marsal Taxand leaders hosted a webinar to discuss the 2021 Autumn Budget and Spending Review released last week, breaking down the key measures announced by the UK government and outlining risks and opportunities for businesses and clients.
According to A&M Managing Director Marvin Rust, while the announcement included welcome news for many sectors such as the extension to business rates reliefs, it failed to set out a long-term agenda for businesses to enable more investment into the country.
“We saw lots of extension of previously announced things, but what was missing was the more structural reforms that would give our clients the right framework to be able to invest in the UK,” he said.
A much-awaited major reform of the business rates system was also missing, according to A&M Managing Director Kersten Muller. The now extended business rate discount to hospitality and leisure sectors and new incentives such as the green investment relief address only part of the issue and are also offset by the increase in VAT later this year, he said.
The Chancellor Rishi Sunak’s promise to invest nearly £24 billion to build new homes and £120 billion in infrastructure offers a significant opportunity for clients in the property sector, said Muller. “The question now is how you de-risk those more longer-term, illiquid investments to attract more investors and achieve real transformation in those areas".
Increase in R&D Costs?
Changes to research and development (R&D) tax incentives also featured prominently in this week’s Budget, and may have a significant impact for larger groups that carry on their R&D activity outside the UK. It is common for organisations with an international footprint to sub-contract R&D activity to lower cost jurisdictions and so the proposal to exclude the costs of such activities from R&D tax credit claims could add significant costs in the short term, said Claire Lambert, A&M Managing Director. More details of this proposal are yet to emerge.
In reward and employment tax, there were few surprises, with major announcements including the new social and healthcare levy and the hike in the tax on share dividend income made earlier this year. According to A&M Managing Director Louise Jenkins, those with staff budget responsibilities need to take those measures into account when forecasting for next year.
A lack of measures that could help an increase in workforce productivity and employment needed to support the UK’s economic growth is one point of concern, especially in light of the exodus of workers following Brexit, added Marvin Rust.
The government announced around £30 billion in total funding for its net-zero “green” strategy, however rumoured measures to incentive families make more environmental-friendly choices such as home insulation were absent. “We were expecting a bit more on environmental matters,” said Jonathan Hornby, A&M Managing Director.
To know more about these and other measures announced in the 2021 Autumn Budget and how they affect your business, please get in touch with A&M Tax specialists.
