Features, Accountancy

Everything accountants need to know about the Autumn Budget 2021

Nick Levine By Nick Levine on 28 October 2021   •   5 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Everything accountants need to know about the Autumn Budget 2021</span>

Why has Modulr covered the Budget this year? 

We’ve teamed up with chartered accountant, fintech consultant and Pathfinder Nick Levine to deliver a Budget summary bespoke to accountants. 

That’s because it’s our mission to make more time for accountants, be it through our payments technology and partners, such as Sage, IRIS and BrightPay, or through our content. We produce blogs, guides, and tutorials, as well as the Pathfinders newsletter and private LinkedIn group, to make the lives of accountants easier.

What do accountants need to know about the Budget?

Each Budget introduces a raft of new policies, many of which are brought in at short notice, and keeps accountants on their toes due to needing to implement related changes for their clients.

While accountants often lose time around the Budget, interpreting new information and feeding it back to their clients, technology tools such as cloud accounting software and the Modulr Payments Dashboard free up time for accountants by using automation for tasks that have historically been completed manually.

It’s a given if you’re a firm reading this that you will already be on your digital transformation journey, so grab a coffee and take out a few minutes to get up to speed on the most relevant points from this year’s Autumn Budget.

Annual Investment Allowance 

The £1m Annual Investment Allowance, which was initially due to end in January 2022, has been extended to March 2023. 

This will allow businesses to invest in equipment and machinery as a fully tax allowable expense against profits.

Accountants should make their clients aware of this change to encourage them to invest in the growth of their businesses. As spend may be significant for some clients, accountants should make sure they are using the latest automation technologies to see whether this may strain cash flow.

Minimum wage

A rise in the minimum wage will be introduced from April 2022, with workers between the ages of 21-22 seeing their wages increase from £8.36 to £9.18 and over 23s having an uplift from £8.91 to £9.50 per hour. 

Accountants will need to work with their clients to factor these increased costs into their forward-looking forecasts so that they can meet the uplift. This could also be a good opportunity for accountants to incorporate the Modulr Payments dashboard for their clients when making payroll payments. This will make the payroll process more efficient and easier to manage.

Business rates

Businesses in the retail hospitality and leisure sectors in England will benefit from a 50% discount on their business rates, up to a maximum of £110,000. This is part of a longer-term strategy to reduce the overall value of business rates by £7bn over the next five years.

This will be welcome news as these sectors were particularly hard hit during lockdown and have found it harder to recruit staff since the economy has reopened.

This creates an opportunity for accountants to work more closely with multi-site clients to assess the viability of their existing locations, alongside the option to search for new sites for those who are performing well.

RLS Loan Scheme

The RLS scheme, helping qualifying SMEs affected by covid with government loans, was first due to close on 31 December 2021 but has now been extended by six months to 30 June 2022. Up to £2m is available per business, with the scheme being tweaked so that the government will now guarantee 70% of funds rather than 80%.

To help businesses access loans faster, the government should work with their clients to incorporate open banking solutions so that the latest transactions can be submitted to lenders.

R&D tax relief

In a move that tech businesses will welcome, R&D tax relief will be available on data and cloud computing costs for the first time. This is due to come into effect from April 2023.

Accountants should review their client base to identify those who are likely to qualify, as R&D tax relief, which can reduce corporation tax bills or be paid out as cash for loss-making businesses, can be an effective way of easing cash flow, alongside optimising pay runs through tools which use the Faster Payments network. 

Basis Periods 

It was confirmed that changes to basis period rules, requiring self-employed individuals and partnerships to have a year-end of 5 April or 31 March, will be pushed back by one year to 2024/25.

This will buy more time for sole traders and partnerships to make these changes before the introduction of MTD for income tax, which has also been pushed back by one year, to come into force from April 2024.

The basis period push back will make it easier for accountants to get the affairs of their clients in order by moving them to cloud accounting software in advance of MTD. Additionally, the delay will also buy them additional time to calculate and pay additional tax from clients forced to change their year ends.

If you want to reap the business benefits of digitisation and automation, then join Modulr’s Accountancy Pathfinders Programme - an exclusive community for forward-thinking accountants and practices. The Accountancy Pathfinders brings together the industry’s innovators and forward-thinkers to discuss, debate and develop new innovations that will shape the future of accountancy services and unlock the game-changing accountancy technologies that will help you deliver premium products and services to your clients.

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