The Chancellor has confirmed that government spending plans will be outlined at the Spending Review on 27 October alongside a second Budget
This will be the second Budget of the year, following the March Budget which happened in mid-March, the week before the country went into lockdown due to covid-19.
The three-year review will set government departments’ resource and capital budgets for 2022-23 to 2024-25 and the devolved administrations’ block grants for the same period.
Mean core departmental spending will grow in real terms at nearly 4% per year on average over this parliament, the Treasury confirmed. By 2024-25 that means that core departmental spending will be £140bn more per year in cash terms than at the start of the parliament.
Part of the Spending Review will focus on plans to level up across the UK to increase and spread opportunity; ways to improve outcomes UK-wide where they lag and working closely with local leaders; and strengthen the private sector where it is weak. There will also be more detail about the government’s ambitions to lead the transition to net zero across the country.
Chancellor Rishi Sunak said: ‘At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.’
Core day-to-day departmental spending will follow the path set out at spring Budget 2021, with the addition of the net revenue raised by the new Health and Social Care Levy and the increase to dividend tax rates. The government will make available around an additional £12bn per year for health and social care on average over the next three years.
In total, day-to-day spending will increase to £440bn by 2024-25, increasing by nearly £100bn a year in cash terms over the parliament.
The spending increase is part of a broader plan to return public finances to a sustainable footing over the medium-term after the pandemic. The Treasury added that the ‘spending plans and focused tax changes to fund the Health and Social Care levy, alongside the measures taken at the last Budget, show that we are determined to get our fiscal position back on track, so that we can continue to fund excellent public services in the future’.
Departments have been asked to identify at least 5% savings and efficiencies from their day-to-day budgets as part of these plans.
The details of the Finance Bill 2021 have been published by the government.
The Bill outlines the key measures set to be brought into legislation, including many measures announced in the recent 2021 Budget.
In his Budget speech, Chancellor Rishi Sunak announced an extension of the stamp duty holiday in England; a super-deduction capital allowance; extensions of the Coronavirus Job Retention Scheme (CJRS) and the Self-employment Income Support Scheme (SEISS); and an extension of the VAT cut for the tourism and hospitality sectors.
The Bill will make sure the measures announced in the Budget take effect from 6 April 2021. It also legislates for tax changes that were previously consulted on and subsequently confirmed at the Budget.
Internet link: UK Parliament website
Chancellor Rishi Sunak set out a Budget to protect businesses through the pandemic, fix the public finances and begin building the future economy.
The Chancellor once again pledged to do ‘whatever it takes’ during the COVID-19 pandemic and confirmed that the furlough scheme would be extended until September 2021 to support jobs through the crisis.
Mr Sunak also confirmed that the Self-Employment Income Support Scheme (SEISS) has also been extended, with two further grants this year. Claimable by the self-employed, including the newly self-employed from 6 April 2019, provided they have filed their 2019/20 tax return for by midnight on 2 March 2021,
The stamp duty nil rate band on residential properties in England up to £500,000 will continue until the end of June. It will taper to £250,000 until the end of September, and then return to the usual level of £125,000 from 1 October 2021.
To support businesses as they re-open following lockdown, £5 billion will be made available in restart grants. Non-essential retail businesses re-opening first will be eligible for up to £6,000 but the leisure and hospitality sectors, which have been worse affected and will re-open later, will be eligible for up to £18,000.
However, the rate of corporation tax will increase to 25% in April 2023 for companies with profits over £250,000, whilst retaining a Small Profits Rate of 19% for companies with profits of £50,000 or less.
The Chancellor also introduced a super-deduction for companies investing in qualifying new plant and machinery. Under this measure a company will be allowed to claim 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances.
He also confirmed the location of the eight Freeports in England. Freeports are special economic zones with favourable tariffs and lower taxes to make it easier and cheaper to do business.
Internet link: GOV.UK speeches