The Scottish Budget

The Scottish Budget

Finance Secretary, Kate Forbes delivered the 2022-2023 Scottish Budget on Thursday 9 December 2021, detailing the Scottish Government’s financial and tax plans for the coming year.

As the first budget of the SNP partnership with the Scottish Green Party, the budget sought to deliver on key commitments including free bus travel for young people, doubling child payments, and redoubling efforts to meet emission targets.

The Scottish Budget outlined the Government’s spending plans for economic recovery, climate change mitigation and reducing poverty. Ms Forbes underlined the pressure on the economy of the continued effect of the pandemic, previous lockdowns and the effect on budget promises.

With this budget acting as a transitional plan, Ms Forbes pointed towards the Framework for Resource Spending Review which will be published in May 2022, offering longer term multi-year spending plans.

 

During the announcement, the Finance Secretary said that the Fiscal Commission is forecasting that the economy will recover to pre pandemic levels by June 2022, despite high unemployment rates at the end of 2021.

Key announcements:

£18bn for Health & Social Care

Increase in minimum wage for social care staff to £10.50 per hour

£110m to provide free bus travel for young people from January 2022

£72m for the expansion of free school lunches

£544m for free funded early learning and childcare

£831m for affordable housing

Doubling of Scottish Child Payments to £20 per week

£500m to the Just Transition Fund for the North East and Moray

£20m for Energy Transition Fund projects in the North East

£23.5m for Green Jobs Fund

£25m to support transformation of farming and food production to work towards sustainable and regenerative agriculture

Land and Buildings Transactions Tax

In order to help first-time buyers and assist house buyers, the current rates and bands will remain unchanged in 2022.

Business rates

With businesses still experiencing difficulties from the Covid-19 pandemic the Government announced a phasing of return to business rates.

100% tax relief in 2022 for small businesses with rateable value of less than £15,000.

Reduce rate of 50% for retail, hospitality and leisure sectors in Q1 of 2022, capped at £27,500 per rate payer.

Non-Domestic Rates poundage 49.8p.

Income Tax

Income Tax rates in 2022-2023 will remain unchanged

The starter and basic rate bands will rise in line with inflation

The higher and top rates will remain frozen at their current levels.

Scotland’s first Framework for Tax will be published later in December.

Scottish Landfill Tax

Standard and lower rates will increase from 1 April.

Training

£225m to be invested in Skills Development Scotland to address labour shortages.

Contact James Milne Chartered Accountants on 01224 584458, 01467 723311 or 01330 828500.

Congratulations Steph Strachan

Congratulations Steph Strachan

Congratulations to Steph Strachan who passed her final ATT (Association of Taxation Technicians) examination in October.

She achieved 90% in her final exam after completing a mixture of written papers and computer-based examinations. Steph has worked hard and should be extremely proud of her achievement.

Steph joined James Milne after obtaining a first-class honours degree in Accounting and Finance from Robert Gordon University in 2012, joining us the day after her graduation ceremony. As well as being very experienced and now fully qualified, Steph has an impressive ability to work well under pressure, which is important given her role in personal tax.

She said: “I am thrilled to have passed my examinations, it has been hard work but it has been worth it. The team at James Milne has been really supportive – the family culture at the firm, including the flexible working arrangements, has made a real difference to my studying and my everyday job as well”.

A fond farewell to Ellen

A fond farewell to Ellen

We were sad to wave farewell to Ellen Smith in November who had been with James Milne for almost ten years.

Ellen joined us straight from Robert Gordon University in 2012 as a Chartered Accountant trainee, and began training for her Chartered Accountant’s qualification. As a qualified accountant, she was promoted to Accounts Manager in 2018, providing James Milne clients with a professional and friendly service.

Over her time, Ellen has worked with a wide variety of clients from small individual retailers to large engineering companies.

Ellen is leaving practice work to take up an industry position. We wish her every happiness in her new position, and will miss her happy, smiling face and wonderful baking!

Farming. Time to make plans for the years ahead.

Farming. Time to make plans for the years ahead.

The rural economy is a staple part of Aberdeenshire’s heritage and a sector that James Milne Chartered Accountants has served since its formation in 1888.

Michael Fotheringham CA, a partner at James Milne, looks back on what has been a tumultuous year for farming and the prospects facing the industry in the years ahead.

A lot has been thrown at the UK farming industry in the last year. Poor weather combined with the impact of the pandemic have, for some farmers, brought increased hardship and lower incomes. As the industry starts to recover, another set of challenges lie in wait: inflationary pressures, labour shortages and uncertainty surrounding Brexit and future trade deals.

While this year’s harvest was disrupted by rain, yields have held up well, matched largely by contract and spot prices and farmers and growers will be looking forward to 2022 with more optimism.
Cattle and lamb prices have maintained higher than normal levels seen since the spring, which it is thought, is being driven by reduced import levels from the EU; a positive outcome of Brexit possibly. Whilst this suits the breeders, those looking for grazing/store livestock have found markets tougher to fulfil their usual annual requirements.

Farmers and growers planning to invest in new plant and equipment may wish to capitalise on the news that the Annual Investment Allowance (AIA) is to be (again) temporarily extended from £200,000 to £1,000,000 for qualifying expenditure from 1 January 2022 to 31 March 2023. Being able to claim 100% tax relief on qualifying plant and machinery should encourage investment. This is a continuation of the previous allowance that was due to be reduced back to £200,000 from 1st January 2022.

Farmers investing in green property improvements can take advantage of incentives offered by the new Green Investment Relief to invest in green tech such as solar panels.

Other budget measures saw a change to Capital Gains Tax, extending the time to report and pay tax due on gains from residential property from 30 days to 60 days. It was feared that Capital Gains Tax would be aligned to Income Tax. Those fears were unfounded with no change for those who benefit from Agricultural and Business Property Relief.

This means financial gains from farmland or certain business property and assets are exempted on death, allowing families to leave these assets to the next generation with a reduced or eliminated inheritance tax bill.

This is a complex subject where it is always worth seeking professional advice as HMRC will take great care examining claims and working businesses should not lose out on the relief they may be entitled to. Our tax team has wide experience in the agriculture sector, serving many clients, and are ready to advise on compliance issues and tax-related matters.

On wages, the Agricultural Wages Order will be affected by change to the national living wage paid to workers aged 23 and above, which is to increase from £8.91 an hour to £9.50 an hour from April 2022. The national minimum wage for workers under 23 and apprentices will also rise.

Recovery will take time but there are signs of green shoots despite rising costs. Beef and lamb prices remain high while forward contract prices for 2022 harvest are already looking healthy. And we all hope the pandemic will finally be brought under control and, of course, the weather is kinder next year. That would make such a difference.

Guide to the Autumn Budget

Guide to the Autumn Budget

Did the Autumn Budget meet your expectations as a budget for growth that will lead to higher wages, higher skills, and rising productivity?

For a summary of the main announcements from the Chancellor’s 2021 Budget visit our resource centre and download our Autumn Budget guide. It provides a useful summary of all the main announcements as well as the less publicised changes that are most likely to affect your business or personal finances. And it’s full of tax and financial planning tips that you may also find useful.

The guide provides the latest on Making Tax Digital (MTD) and some key dates on adoption and compliance, which will be of particular interest to those who are self-employed. If your accounting period is not aligned to the tax year, you should be aware of the transition to the new rules that take effect from 6 April 2024.

This change may impact when business profits are taxed which might affect cashflow, although adjustments in 2023/24 are designed to ease the transition.

From 1st April 2023, corporation tax rates are to remain at 19% for companies with profits up to £50,000 and rise to 25% for companies with profits over £250,000. Again, there will be transitional rates for those between £50,000 and £250,000.

Businesses planning to invest in plant and machinery will welcome the announcement that the Annual Investment Allowance (AIA), which was temporarily increased from £200,000 to £1 million in 2019, will remain at £1,000,000 until 31 March 2023. This provides 100% tax relief on qualifying expenditure.

The Chancellor also extended the Recovery Loan Scheme until June 2023 to give businesses more time to bounce back after the pandemic. Businesses can apply for a loan of up to £2 million, which are 70 per cent backed by the government (reduced from 80 per cent originally).

Visit our resource centre for a full rundown of the Autumn Budget. If you would like to discuss how the budget announcements may impact on you or your business, please get in touch.

Guide to the Autumn Budget

James Milne Chartered Accountants is sponsoring online news websites Aberdeen Business News and Scottish Business News.

The sponsorship will enable James Milne to communicate with business people across Aberdeen, Aberdeenshire and beyond and share the latest taxation and accountancy news and advice.

The digital and social media business news group shares business news across the country. SBN satisfies a need for business news specifically in Scotland, while ABN focuses on the North-east.

As well as the digital news site, ABN sends out daily newsletters to over 6000 professionals, the website serving over 20,000 users. ABN covers all types of business from energy to food and drink to property, giving live, relevant news to business people in the area.

Partner Michael Fotheringham commented: “We are delighted to have partnered with ABN and SBN, which will allow us to communicate directly with the business community of Scotland and in particular Aberdeen city and shire on a regular basis. We all turn to our phones and laptops for our news now, so it is a good move for James Milne to be at the heart of live business stories. Visit Aberdeen Business News.