What the Autumn Statement means for small businesses

VAT registration threshold – the VAT threshold at which businesses must register will stay at £85,000 until 2026. Because the threshold won’t increase in line with inflation small but growing businesses could now have to register for VAT sooner than planned. 

 

Personal tax allowance – the income tax personal allowance threshold will stay at £12,570 until 2028 and won’t keep pace with inflation. The additional income tax threshold when you pay 45% will come down from £150,000 to £125,140. This change is expected to affect 250,000 people who will pay the additional rate for the first time. 

 

Other tax allowances – the Statement re-confirmed the increase in Corporation Tax. Business owners might pay themselves in dividends and pay capital gains tax when they sell business assets like land and machinery. Annual allowances before tax is due will be reduced: 

• the dividend allowance will go down from £2,000 to £1,000 in 2023/24 and to £500 in 2024/25 

• the capital gains tax allowance will be reduced from £12,300 to £6,000 in 2023/24 and to £3,000 in 2024/25. 

 

Business rates – from 1 April 2023, business rates will be changed to reflect increases in property values since they were last reviewed in 2017. There will be a support package worth £13.6 billion over five years to help with the transition. 

 

The business rate multiplier based on the rateable value of your premises will be frozen for a further year in 2023/24. Transitional relief will cap increases caused by the changes in rateable values. For the smallest properties the cap will be 5%, while increases for medium-sized and larger properties will be capped at 15% and 30%. 

 

Retail, hospitality, and leisure business rates relief will increase from 50% to 75%, up to £110,000 per business in 2023/24. 

 

For businesses that are no longer eligible for small business rates relief following revaluation bill increases will be capped at £600 per year from April 2023. 

 

Energy costs – there will be more targeted support for home and business energy bills. 

 

Home energy bills will be capped at £3,000 from April 2023 and there will be extra cost of living payments for the most vulnerable. 

 

For businesses, the Energy Bill Relief Scheme will remain until 31 March 2023 but it will be reviewed. This is expected to result in more targeted relief for vulnerable businesses from April 2023. 

 

There isn’t any news yet about fuel duty which was frozen at 52.95p per litre in 2011 and was cut by 5p per litre in Spring 2021. However, a 23% increase is anticipated in March 2023 which could increase the price at the pumps by 12p per litre. 

 

Electric vehicles (EVs) and benefit in kind - when employers make EVs available to employees for private use it is currently taxed as a benefit in kind (BIK) with a cash equivalent of 2% of the list price. This will be retained until April 2025 but will increase to 3% for the 2025/26 tax year, 4% for 2026/27 and 5% for 2027/28. Non EVs will also see the same 1% increase per year in the BIK over the same timescale.  

 

Road tax will be payable on EVs from 2025 and is expected to be £10 for the first year and then the same as other vehicles in following years. The Government says it will legislate in the Spring to extend the 100% First Year Allowance for electric vehicle chargepoints to 31 March 2025 for corporation tax purposes and 5 April 2025, for income tax purposes. 

 

National living wage – for businesses with employees the national living wage will increase to £10.42 and the national minimum wage is also expected to increase from April 2023. 

 

Research and development tax relief – research and development tax relief for small businesses will be reduced to 86% and the credit rate will be reduced to 10%. Credit for separate research and development spending will increase from 13% to 20%.