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IoD 2021 Budget Scorecard

08 Nov 2021

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Business Taxation

What the IoD called for Budget 2021
The government should reduce the planned level of business tax rises now that the economic outlook is more positive than was expected at the time of the last Budget. No reversal of the planned rise to the main rate of corporation tax from 19% to 25% in April 2023. No reversal of the planned increase in employers' national insurance from April 2022.
The Treasury should conduct, and publish before the March 2022 Budget, its own macroeconomic assessment of the proposed rise in employer’s national insurance including but not limited to the effect on GDP, private sector investment and employment, on a national, sectoral, regional and demographic basis. The Office of Budget Responsibility included a short assessment of the impact of the tax rise in its Economic and Fiscal Outlook, published alongside the Budget, concluding that the tax 'is passed through entirely to lower real wages in the medium term… leaving nominal earnings 0.5% lower and prices 0.1% higher from 2023-24'
The Chancellor should commit to take account of the results of this assessment before the end of the 2022-23 transition period to the new levy system. No such commitment made

Measures to spur business investment

What the IoD called for Budget 2021
Commit to extend the 130% investment super-deduction beyond March 2023 to give companies the confidence to engage in longer-term investment planning. No commitment made to extend the investment super-deduction but the £1m Annual Investment Allowance will be extended from December 2021 to March 2023, which is of benefit to companies that regularly spend more than £200K in plant and machinery and are not eligible for the super-deduction.
Include human capital in the definition of qualifying expenditure for the 130% super-deduction No such commitment made
Expand the scope of R&D tax credit system to give greater weight to digital innovation, new applications of cloud computing and innovation of all kinds that will reduce carbon emissions. Achieved: qualifying expenditure for R&D tax reliefs expanded to include data and cloud computing costs (with a refocus to domestic investment).
Inject significant capital into the dedicated regional funds managed by the British Business Bank, now that European Commission structural funding is no longer available. Achieved and extended, with £1.6bn over 3 years and an additional £150m increase in the regional business angels programme.
Double the maximum investment a new company can receive through the Seed Enterprise Investment Scheme from £150,000 to £300,000 and consult on expanding the definition of qualifying activity on tax relief for investments in venture capital schemes to include professional services, hospitality and low-carbon energy. No such commitment made

Skills

What the IoD called for Budget 2021
Increase the resourcing and mandate of Sector Skills Councils to ensure high-quality industry-specific accredited and modularised training and progression paths are available at every level of every type of work, online and in person. No such commitment made
Reintroduce lifelong personalised training budgets to be used on such accredited vocational and professional training to ensure nobody is prevented from obtaining high-quality industry-specific skills they need to progress, regardless of their age, seniority or employment status. No such commitment made: skills focus was on new-starter qualifications (e.g. via Bootcamps and further and higher education funding) rather than a holistic approach to upskilling.
Widen the uses to which firms deploy their apprenticeship levy funding pots to fill skills gaps at all levels within the organisation. No such commitment made
Introduce a more generous company tax incentive for the specific purpose of upskilling on certified professional development courses, including for board directors. No such commitment made: skills focus was on new-starter qualifications (e.g. via Bootcamps and further and higher education funding) rather than a holistic approach to upskilling.
Introduce tax allowances for sole traders and the self-employed to incentivise investment in accredited professional and vocational training. Crucially this should include vocational/professional upskilling and reskilling as opposed to the refresher and CPD courses that are already tax deductible. No such commitment made: skills focus was on new-starter qualifications (e.g. via Bootcamps and further and higher education funding) rather than a holistic approach to upskilling.
For those out of work, we recommend extending the Kickstart apprenticeship scheme beyond December 2021 and remove the age restrictions, and also reinvigorating the Enterprise Allowance by involving a wider range of organisations in the mentoring aspect of the scheme. Partially achieved - the Kickstart scheme will be extended to March 2022 but the application deadline remains December 2021 and it remains youth-focused. No commitment on the Enterprise Allowance but the Start-up loans scheme will be continued, supporting up to 33,000 entrepreneurs by providing loans & mentoring, delivered via the British Business Bank over next 3 years.

Business rates, digital sales tax and levelling up

What the IoD called for Budget 2021
The tax system should be neutral as to whether an item is sold online or in a physical shop. No such commitment made. No fundamental reform of the business rates system; digital sales tax will be phased out as part of the OECD agreement.
The business rate system should reward investment in those geographic areas that have greatest need of regeneration. As part of this it should be sufficiently flexible that local authorities can use it to ‘place-make’: incentivising the types of retail and commercial environments that communities say they want to see. No commitment to use the business rates system to support regeneration or place-making. However a freezing of the business rates multiplier saving businesses £4.6 billion over the next 5 years plus a new temporary relief for retail, hospitality and leisure businesses worth almost £1.7bn.
Any tax on commercial premises should be designed to incentivise investment in the quality of buildings, including reducing their carbon footprint, improve accessibility and introducing high standards of building quality and ventilation that business leaders and staff find necessary in a post-Covid world. Achieved: from 2023, a new 12-month business rates improvement relief is being introduced. Also, eligible plant and machinery used in onsite renewable energy generation and storage, such as rooftop solar panels, wind turbines, and battery storage, will be exempt from business rates from 1 April 2023 until 31 March 2035. Onsite storage used with electric vehicle charging points will also be exempt. Plus a 100% relief for eligible low-carbon heat networks which have their own rates bill.
Valuations should be more frequent, and in line with the business cycle. Achieved: revaluations will now be every 3 years instead of every 5 years.
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