Chancellor delivers Budget to lay foundation for a strong economy
The Chancellor announced that total departmental spending will grow by £150 billion per year in cash terms by 2024/25. This marks the largest real term increase in overall departmental spending for any Parliament this century. The spending growth has increased by 3.8% a year in real terms.
Public research and development (R&D) investment will increase to a record level of £20 billion by 2024/25. Combined with R&D tax reliefs, which the government intends to modernise and refocus, total government R&D support as a proportion of GDP is forecasted to increase from 0.7% in 2018 to 1.1% in 2024/25.
The Chancellor unveiled a new temporary business rates relief in England for 2022/23. This rates relief is for eligible retail, hospitality and leisure properties and is worth almost £1.7 billion. The government stated that the reform of business rates will make the system fairer, more responsive, and more supportive of investment.
Mr Sunak also announced significant changes to fuel duty and alcohol duties: fuel duty will be frozen at 57.95p per litre for 2022/23. Additionally, drinks will be taxed in proportion to their alcohol content The purpose of these changes, according to the Chancellor, is to make the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes’.
Meanwhile, the government will give £11.5 billion to help build up to 180,000 affordable homes. An additional £4.7 billion will be invested in the core schools budget in England.
The Chancellor also confirmed that the government will increase the National Living Wage to £9.50 per hour from April 2022 and cut the Universal Credit taper rate from 63p to 55p.
Amy Telford ACA from Telford, Harvey & Bates comments on the proposed Budget:
“The Chancellor has unveiled a Budget that in his words, ‘levels up to a higher-wage, higher-skill, higher-productivity economy.’ From a business perspective, the business rates relief have been discounted 50% for one year to help the sectors mentioned. Combined with Small Business Rates Reflief, this means over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%”
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