Autumn Budget 2021: What small businesses need to know

There were several measures of interest to small businesses in the chancellor's second Budget of 2021 as discussed by our panel of entrepreneurs. We've summarised the key points from the Budget as well as the accompanying Spending Review.

Enterprise Nation's reaction

Emma Jones, founder of Enterprise Nation, said: "This was a booster Budget for business. We have always said the role of government when it comes to supporting small businesses is to imbue confidence and deliver on infrastructure.

"This Budget did both with funding to help the high street, extra tax relief for tech enabled ventures, and support that will help businesses raise investment. It offers a powerful launchpad for anyone starting or growing their own business - many founders listening will have been buoyed by the optimism alone."

Business rates

Sunak made several announcements on business rates:

• A new, one-year 50% discount on business rates for retail, hospitality and leisure businesses in England, up to a maximum of £110,000.

• From 2023, property valuations will take place every three years instead of five.

• New investment relief for green technologies. Until 2035, plant and machinery used onsite for renewable energy will be exempt from business rates.

• From 2023, businesses making property improvements will pay no extra business rates for 12 months.

Alcohol duty

Several announcements were made on alcohol duty:

• The duty system will be simplified by reducing the number of main rates from 15 to 6. All products will be taxed in proportion to their alcohol content and the government will simplify the way businesses register and pay for duty.

• A new small producer relief for cidermakers and other producers of drinks lower than 8.5% ABV.

• Duty rates on draught beer and cider will be cut by 5%, taking 3p off a pint.

• Duty rates on beer, cider, wine and spirits will be frozen for another year.

Business funding

The Budget includes the following announcements for business funding:

• The Recovery Loan Scheme will be extended until 30 June 2022. Small and medium-sized businesses can borrow up to a maximum of £2m per business.

• New £1.4 billion Global Britain Investment Fund to encourage investment in the UK’s life sciences, offshore wind and automotive manufacturing sectors.

• £1.6 billion for the British Business Bank’s (BBB) regional funds providing debt and equity finance to SMEs. Using the funding, BBB will set up new regional funds in Scotland (£150m) and Wales (£130m), and to build on its existing programmes in Northern Ireland (£70m). It also provides £660m for the Northern Powerhouse Investment Fund which includes an expansion into the North East of England, £400m for the Midlands Engine Investment Fund and £200m for a new fund for businesses in the South West of England.

• £150m for the Regional Angels programme, which addresses imbalances in access to early-stage equity finance across the UK.

• New funding to deliver 33,00 loans through the Start Up Loans scheme, which provides funding and mentoring to people who want to start a business.

UK Shared Prosperity Fund

The Budget and Spending Review confirmed the launch of the UK Shared Prosperity Fund (UKSPF), which replaces business funding the UK used to receive due to being part of the EU. It is worth £2.6bn over the next three years. Funding will rise to £1.5 billion a year by 2024-25.

UKSPF will fund Multiply, a new UK-wide programme to give adults functional numeracy skills to improve their employment prospects.

Research and development (R&D) tax relief and innovation

The government will expand R&D relief to include data and cloud computing costs.

UK companies claimed tax relief on £47.5bn of R&D expenditure in 2019 but the ONS estimates that businesses only carried out £25.9 billion of privately-financed R&D in the UK. The Budget document says: "This gap is partly explained by companies being able to claim for activity taking place overseas. This suggests that the UK is not effectively capturing the benefits of R&D funded by the UK taxpayer through the reliefs. Many other countries, including Australia and the USA, do not offer relief for R&D activities performed overseas.

"To more effectively capture the benefits of the reliefs, including improved skills, know-how and understanding, the government will refocus the reliefs towards innovation in the UK. The government will also set out plans to tackle abuse of and improve compliance with the R&D tax reliefs later in the autumn."

The government will increase funding for core Innovate UK programmes increasing to around £1bn per year by 2024-25. Enterprise Nation founder Emma Jones said: "I would love to see more of this budget going to small businesses which would come with more friction-free application process."

National Living Wage

The government will increase the National Living Wage to £9.50 an hour from April 2022.

Apprentices

The Spending Review confirms a previous announcement that the government is extending the £3,000 apprentice hiring incentive for employers until 31 January 2022 and investing approximately £10 million a year in the Sector Based Work Academy Programme (SWAPs).

In addition, a new enhanced recruitment service will be launched by May 2022 to help small and medium-sized enterprises hire new apprentices.

Cultural and creative industries

The headline rates of tax relief for theatres, museums, orchestras and galleries will be temporarily increased from 27 October 2021 to 31 March 2024.

The Spending Review provides £42m for "bespoke support" for the UK’s independent film and video game sectors.

Local council funding

Councils will be provided with £4.8bn of new grant funding for social care and other services. The government said it is the largest annual increase in local government core funding in over a decade.

Enterprise Nation founder Emma Jones said: "I do feel councils will become important new business support channels for small business."

Skilled employees

A new UK Global Talent Network will be launched to work with businesses and research institutes to identify and attract global talent in key science and tech sectors.

The document confirms the eligibility criteria for the new Scale-Up Visa, which is aimed at making it quicker and easier for fast-growing businesses to bring in highly-skilled individuals. The scheme launches in spring 2022 and will be open to applicants who pass the language proficiency requirement and have a high-skilled job offer from an eligible business with a salary of at least £33,000.