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Written by Wesleyan

Autumn budget reaction 2021

financial planning
4 min read

Chancellor Rishi Sunak laid out his Budget for a post-Covid economy today as he sought to support the ongoing recovery against a backdrop of rising inflation and concern over the cost of living.

With a difficult balancing act to strike between supporting public services and filling the hole in the nation’s finances, the speech was light on announcements for doctors, dentists and teachers.

Expected changes to the Annual Allowance, Lifetime Allowance, Capital Gains Tax and Inheritance Tax all failed to materialise. So what can we take from the latest Budget?

Tax

There was disappointment that the Annual Allowance remained frozen at £40,000 and the Lifetime Allowance at just over £1 million, particularly among medical and dental professionals.

Parminder Gill, Advice Policy Consultant at Wesleyan Group, said: “This is clearly a step in the wrong direction.

“The Lifetime Allowance has already been reduced by around £800,000 since 2010 and freezing the limit, coupled with the rising inflation, means more hard-working individuals – including those in key public services – are going to fall into HMRC’s scopes and could face extra tax charges.”

Today’s budget confirmed new HeaIth and Social Care Levy, designed to raise £12 billion a year to tackle the backlog in the NHS and address shortages in the social care sector.

It means a 1.25% rise in National Insurance from April 2022, paid by employers and employees, and a 1.25% increase in tax on income from share dividends.

But there was no specific action to address the lack of new medical professionals coming into the profession, which is putting GPs under increased pressure.

Alec Collie, Head of GP segment at Wesleyan Group, said: “The NHS has had a torrid 18 months and is leaning into a bleak winter – money for new equipment and infrastructure is welcome, but without skilled staff to use it, the benefits simply can't be fully realised.”

New Business Rate reliefs on green investment and property improvements will be welcomed by those incorporated dental practices that pay business rates.

Extending the £1 million annual investment allowance to March 2023 will support spending on new equipment, which can help practices that are looking to expand and grow the range of services they offer.

Michael Copeland senior area manager at the Wesleyan Group, said: “This, alongside the cancelled increase in the business rates multiplier, will go some way to helping dentists save cash that they can put into delivering a better quality of service to patients, and meeting demand.”

Practices may also be able to access the Recovery Loan Scheme to support companies to access loans and other kinds of finance so they can recover after the pandemic, which has been extended until June 2022.

Earnings

The National Living Wage will rise from £8.91 per hour to £9.50 from April next year, while the pay freeze imposed on public sector workers last November will be lifted.

How much public sector pay packets will increase will be based on recommendations from independent pay review bodies, though it is unlikely to keep pace with inflation, which is forecast by the Bank of England at 4% for the next year.

Simon Rake, head of the teachers division at the Wesleyan Group, welcomed the news: “It remains to be seen exactly how much of an increase they will get and whether this will be an actual, real-term boost that beats inflation.

“With the country facing rising costs of living, anything less would be a real kick in the teeth, and likely only make professions like teaching less attractive, ultimately making it more difficult to attract and retain the educators we need.”

The news will also be welcomed dental practice staff.

But Michael Copeland senior area manager at the Wesleyan Group, added: “For practice owners, it will naturally increase core costs – they’ll need to consider what this means for their wider practice budgets and think about how they’re positioned to meet their higher wage bill.”

Education

The Chancellor announced a £4.7 billion package for education, with funding per pupil to be restored to 2010 levels over the next three years, including the £560 million Multiply scheme, designed to improve adult numeracy.

But there will be questions marks over how the Multiply initiative will be delivered, given the existing pressures on the teaching profession.

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