In the Chancellor’s Autumn Budget there were a number of interesting, well trailed announcements, including the prediction of a stronger and quicker recovery from Covid than had originally been anticipated. The Office for Budget Responsibility (OBR) now forecast that the economy will return to pre-Covid levels by the start of 2022. Some of the other announcements that are relevant to our sector are summarised below.
The Chancellor announced a £24 billion multi-year housing settlement, which includes spending £11.5 billion on affordable homes to build more than a 1 million new homes. This includes up to 180,000 affordable homes (two thirds of which will be outside London) and bringing brown field sites back into use. He also announced details of the Residential Property Developer Tax (RPDT), which will see developers contribute to building safety - largely cladding - remediation. The RPDT will be set at a rate of 4% on profits over £25 million and is expected to create a £5 billion fund over time.
There were changes to business rates in the Budget. Aside from the well-publicised decision to move to triennial reviews, businesses are being encouraged to adopt green technologies and decarbonise their businesses.
The Government committed to introduce a 100% improvement business rate relief for a period of 12 months. This will help businesses where eligible improvements are made to an existing property which increase its rateable value. It will take effect in 2023 and be reviewed in 2028. Alongside this, targeted business rate exemptions will be introduced between 2023 and 2035 for eligible plant and machinery used in onsite renewable energy generation and storage, as well as a 100% relief for eligible heat networks, all to support the decarbonisation of non-domestic buildings.
The Chancellor highlighted NS&I’s Green Bond, the 3 year fixed-rate bond which went on sale last week. It will be on sale for a minimum period of three months with an interest rate of 0.65%. The Government wil not publish a target for the amount they wish to raise through this bond, but will from time to time give a public update on the projects that the money is used to support. ISAs remain unchanged as the subscription limits continue to be set at £20,000 for adults and £9,000 for children. Savings income subject to the 0% starting tax rate also remains unchanged for 2022-23.
Corporation Tax and Surcharge
When the Chancellor announced a rise in corporation tax in the Spring 2021 Budget, he also committed to reviewing the banking surcharge. In this Budget he announced that the surcharge would be reduced from 8% to 3% from April 2023. The combination of the increase in Corporation Tax from 19% to 25% (also from April 2023) and the reduction in the surcharge will see banks and some larger building societies paying a cumulative total of 28%, one per cent above the current 27% total and 3% above corporation tax. The Government has also committed to raise the annual allowance within the surcharge from £25 million to £100 million to support growth and competition within retail financial services.