UK Autumn Budget 2021

Eversheds Sutherland comments on the Chancellor's Budget and what it will mean in practice

The UK Chancellor of the Exchequer, Rishi Sunak, will present his 2021 Autumn Budget to Parliament on Wednesday 27 November 2021.

This Budget arguably comes at a difficult time – like many countries, the financial stability of the UK has been sorely tested by the pandemic but the recovery has appeared to be strong, at least through the middle part of 2021. Should the Chancellor act now to firm up the financial stability of the UK through curbed spending and new taxes, or should he seek to nurture and grow the recovery of a fragile economy? With significant revenue generating tax changes already having been announced (the corporation tax increases announced in the Spring Budget and scheduled for 2023 and the Health and Social Care Levy / National Insurance Contribution increases announced recently), the expectation is that there will not be further headline tax increases (for example, significant Capital Gains Tax changes seem unlikely and a wealth tax still appears a very remote prospect). But the description of the Budget as a “technical” Budget does leave the door open for more low profile, nuanced changes that could still generate material tax revenue (in particular if pension contributions or the lifetime allowances are targeted).

Aside from shoring up the UK’s finances, what about longer-term issues? The COP26 climate change conference beginning the day after Budget day is another reminder of the need to act now to secure the long term future of our planet, with fiscal and tax policy key to incentivising positive (and penalising negative) behaviour. Will the UK’s presidency of COP26 be a catalyst for the announcement of further climate-focussed tax initiatives? Tax policy also needs to continue to evolve to address the rise of the digital economy, brought into even sharper focus by the changes imposed on consumers and businesses through the pandemic. Can (and should) the UK high-street be helped, either through changes to business rates or at least by levelling the playing field with an online sales tax? With the BEPS 2.0 changes on the horizon, what is the writing on the wall for the UK Digital Services Tax? Post-Brexit, can targeted VAT changes be more effectively used to support UK businesses?

Check back to view further commentary on the Autumn Budget 2021 as the details unfold.

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