A year in review: 2021 for business

Dec 22, 2021 | Business

It’s been another strange year, and one filled with new challenges for businesses – from COVID-19 restrictions and fears of new variants, to disruption after the end of the Brexit transition period.

2021 began with everyone’s eyes on the rollout of the COVID-19 vaccine programme, which started in the UK on 8 December 2020.

And as the year comes to an end, vaccinations remain the focus still, with plans for booster jabs accelerated to combat the Omicron variant.

The outlook for next year remains uncertain, but we’ll talk about what your business can do to prepare for whatever 2022 brings in our next blog post.

For now, let’s look back at some of the key themes of 2021 for our clients.

The end of the Brexit transition period

On 31 January 2021, the Brexit withdrawal agreement came into effect and the UK was officially outside of EU regulations.

This meant businesses had new rules to understand when trading with EU countries, and those who weren’t directly trading had international delays to contend with.

In March, a YouGov survey found 52% of businesses had faced disruption as a result.

And with new regulatory changes ahead, businesses are still unprepared, with research by the Federation of Small Businesses showing only 25% of small importers are aware of upcoming import checks from 1 January 2022.

Lockdowns and restrictions weigh on retail and hospitality

Retail and hospitality businesses faced some of the most significant disruption as a result of the pandemic in 2020, and difficulties continued this year.

Retail footfall remained deep in the negative figures compared to previous years, and supply chain issues caused widespread disruption.

For hospitality, continued anxieties about COVID have also put a damper on hopes for a swift bounce back to normality, particularly towards the end of the calendar year.

Pubs, bars and restaurants which tend to rely heavily on the festive season have instead seen bookings down by an estimated 40%, and high numbers of cancellations in the lead-up to Christmas.

Targeted measures were announced earlier in the year as part of the Spring Budget, including a business rates holiday and an extension to the temporarily reduced VAT rate.

The Autumn Budget in October also offered support but held back on major reforms, providing a year-long 50% cut to business rates for shops, restaurants, bars and gyms, up to a maximum of £110,000 per business.

But business groups are pressing for renewed measures, with the Confederation of British Industry calling for support “in lockstep with future restrictions” and UK Hospitality running a campaign to permanently retain the current reduced VAT rate of 12.5%.

Property market boom

Despite predictions of a post-pandemic property slump, estimates show that 2021 is set to be a record-breaking year for house buying.

According to UK Finance, total house purchase transactions are expected to reach 1.5 million in 2021 – 47% higher than 2020, and the highest number since 2006.

The stamp duty holiday in England and Northern Ireland, which started in July 2020 and lasted until September 2021, is likely to have accounted for much of the demand this year.

Other factors also played a part, such as Government guarantees for mortgages, and the shift to remote working which prompted many homeowners to rethink their living situation.

For buy-to-let landlords, purchasing activity also increased this year to £18 billion, up 83% compared to 2020.

Many residential landlords struggled, however, with rent arrears due to the pandemic’s economic impact. And in a trend that started before COVID-19, increasing numbers of buy-to-let landlords are planning to sell up due to tax and regulatory pressures.

Research from the National Residential Landlords Association found some 23% of landlords are planning to dispose of a residential property in 2022.

Tax rules, extra costs to make green upgrades, and tighter restrictions on repossession were all cited by landlords as a reason to reduce their portfolio.

In our next blog post, we’ll talk about what the next year looks like for our clients – and what you can do to prepare.

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