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Chancellor’s Budget Summary – October 2021

In his second Budget this year, the focus was on Chancellor Rishi Sunak to put the country on the path of recovery and start the process of rebuilding its fragile economy.

28 October 2021

In this summary we’ve explained the key developments and changes from the Chancellor’s announcement on 27 October 2021. To download a pdf version of our October 2021 Budget Summary click the green download pdf button on the right.

Overview

Without a change in government, it is very rare to have two Budgets in one year. However, 2021 is no ordinary year and now that many of the government’s support measures for businesses have ended, there was always going to be speculation this autumn about what happens next?

Since the summer there have been small signs that the UK’s fragile economy is taking initial steps towards recovery. There are many obstacles in the way, though, with stock and staff shortages, Brexit issues and, more recently, gas prices – to name but a few.

In the three months to August 2021, job vacancies rose above 1 million for the first time since records began. This is obviously putting pressure on salaries as employers compete to attract and retain staff. Higher salaries and other factors are also affecting inflation and there is a general consensus that prices will be forced to rise.

Over the past 18 months, the level of government financial support and the scale of the vaccine roll- out has been impressive, but it comes at an eye-watering cost to the Treasury. Already, a proposed increase to national insurance and the dividend tax have been announced to fund social care, while back in March it was announced Corporation Tax rates will rise from April 2023.

In the run-up to 27 October, we were told this would be the Build Back Better Budget and that the Chancellor’s ambition is to return public finances to a sustainable footing over the medium term. That certainly means cuts in government spending (departments have been told to identify 5% savings in their budgets at the very least).

It will also mean there will be tax changes along the way to replenish the Treasury coffers. In September, the Institute for Fiscal Studies director Paul Johnson called this “the biggest tax-rising year in many decades”.

In our Budget Summary, we have given both overviews and detailed information for personal, business and property-related taxes.

Key highlights from the October 2021 Budget

Final thoughts

As the Treasury begins to release the papers behind the headlines, the Shipleys team will continue to closely monitor what these mean for our clients. We’ll be sharing our conclusions and advice on our website, in our Shipshape magazines, in our Tax Facts card (which will be out later this year) and in our conversations with clients.

In the meantime, if you wish to discuss how this Budget will impact on you, please do talk with your usual Shipleys’ contact. Our key focus remains to help our clients navigate the changes smoothly and thrive.

This Budget Summary is based on the Chancellor’s Budget Statement on 27 October 2021, supplemented by information from official publications.

It reflects our understanding of proposed changes to tax law and practice at the date of publication, but is not a complete and definitive guide. The Budget proposals may be amended before the Finance Bill becomes law.

Specific advice should therefore be obtained before taking action, or refraining from taking action, on the basis of this information.

© 2021 Shipleys LLP

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