Today the Chancellor Rishi Sunak delivered the Budget and Spending Review for 2021, setting out an ambitious package of investment in innovation, infrastructure and skills, which – in partnership with business – will deliver sustainable growth and put us on the path to a high-productivity, high-skilled, high-wage economy that levels up every part of the UK.
How will the Budget and Spending Review support businesses?
• We are extending the temporary £1 million Annual Investment Allowance cap for another fifteen months until the end of March 2023, combined with the super-deduction we have delivered the biggest two-year business tax cut in modern British history.
• We are reducing the burden of business rates by over £7 billion over the next five years including by:
• Freezing the business rates multiplier for another year saving businesses £4.6 billion over the next 5 years.
▪ A new relief for retail, hospitality and leisure businesses worth almost £1.7 billion.
▪ Almost £750 million for businesses to improve their properties and decarbonise.
• The conclusion of the business rates review will modernise the system by committing to more frequent revaluations – every three years instead of every five years.
• Alcohol duty will be frozen across the board, supporting the hospitality industry and its suppliers as they recover.
• An extension of support for the aviation sector, through the Airport and Ground Operations Support Scheme – helping airports and ground handlers with their fixed costs.
• £245 million of tax relief for theatres, orchestras, museums and galleries across the UK.
• £42 million to support world-leading creative industries, providing business and skills development support for SMEs to scale up and providing bespoke support for the UK’s independent film and video game industries.
• Extension of the Recovery Loan Scheme for a further six months until 30 June 2022.
• We are funding the delivery of the Help to Grow Digital and Help to Grow Management schemes, helping 100,000 small and medium-sized enterprises to boost productivity.
• We are reforming the UK’s tonnage tax regime to ensure the shipping industry remains highly competitive in the global market.
• Setting the Bank Surcharge at its new rate of 3%, ensuring the industry remains competitive internationally. The government will also raise the annual allowance to £100 million to ensure that the tax system is supportive of growth within the UK banking market.
• To ease the temporary supply chain pressures, we are continuing to freeze Vehicle Excise Duty for heavy goods vehicles and suspend the HGV Levy for another 12 months from August 2022.
• We are also freezing fuel duty for the 12th consecutive year.
• We are introducing a package of APD reforms that will bolster air connectivity within the Union, through a 50% cut in domestic APD (benefiting 9 million passengers), and further align APD with our environmental objectives by adding a new ultra-long-haul distance band. Taken together, this package represents an overall tax cut to the aviation industry.
• Total spend on skills will increase over the Parliament by £3.8 billion by 2024-25, equivalent to a cash increase of 42% (26% real terms) compared to 2019-20.
• The first increase to employer led apprenticeships funding since 2019-2020 – it will rise from £2.5bn in 2021-22 to £2.7bn in 2024-25.
• We are providing funding to quadruple the number of places on employer-led Skills Bootcamps and delivering 24,000 traineeships a year.
How will the Budget and Spending Review help businesses to innovate?
• We are increasing public investment in R&D to a record £20 billion per year by 2024-25, representing an increase of around a quarter in real terms over the SR period.
• That includes £5 billion on health R&D over the SR period, including for genomics and to support the life sciences industry.
• We are reforming R&D tax reliefs by expanding qualifying expenditure to include data and cloud computing costs and refocusing support towards UK-based innovation, targeting abuse, and improving compliance.
• We are significantly increasing support for business-driven innovation, with funding for core Innovate UK programmes to reach around £1 billion per year by 2024-25.
• Delivered through the British Business Bank, we are also:
o Expanding the Regional Angels Programme by £150 million
o Expanding programmes in the North East and South West
o New funds in Scotland (£150m), Wales (£130m), and building on existing programmes in Northern Ireland (£70m)
• £312 million to continue to fund the Start Up Loans Scheme, which will support up to 33,000 entrepreneurs by providing loans and mentoring for people starting a business.
• A £1.4 billion Global Britain Investment Fund to support new investment in manufacturing industries across the UK, including offshore wind, zero emission vehicles and life sciences.
• A new re-domiciliation regime making it easier for companies to relocate to the UK bringing increased investment and skilled jobs.
• We are introducing a Scale-up visa in spring 2022 to attract the brightest and best global talent to the UK.
• We are launching a Global Talent Network to bring highly skilled people to the UK in key science and technology sectors.
• We will maintain the DIT Global Entrepreneur Programme to bring more entrepreneurs to the UK each year.
