What’s in the Autumn Statement for small businesses?
Posted on 27th November 2023
The Chancellor, Jeremy Hunt, says this year’s Autumn Statement is all about ‘going for growth’ but will it help small businesses?
There are over 100 measures intended to help the UK economy grow. These are funded from increased tax receipts because economic performance is better than expected. Here are some of the key announcements that affect small businesses and their owners.
‘Full expensing’ capital allowance
Businesses can continue to deduct capital spending immediately from taxable profits. This measure was due to end in 2026. Full expensing means businesses can claim a 100% first-year allowance for main rate spending on plant or machinery. There’s also a 50% first-year allowance for special rate spending. These allowances include most capital spending from IT equipment to building works.
R&D tax credit
As expected, the research and development (R&D) tax relief scheme has changed. R&D tax credit schemes will merge from April 2024. The rate for loss-making small businesses goes down from 25% to 19%. The intensity threshold goes down from 40% to 30%. This means companies with a ratio of R&D investment to revenue above 30 can claim tax relief. New restrictions to nominations and assignments for R&D tax credit payments mean only those claiming can receive them in future.
Business rates support for small businesses
The 75% discount on business rates up to £110,000 for retail, hospitality and leisure companies continues. The small business rates multiplier remains frozen for another year. Full funding for local authorities to provide business rates relief comes from a £4.3billion package over the next five years.
Small business payments
The Procurement Act extends the 30-day payment terms for public sector contracts automatically to sub-contractors. From April 2024 companies bidding for large government contracts must show they pay their own invoices within an average of 55 days. The aim is to see this fall over time to 30 days.
National Insurance reductions
National Insurance (NI) payments will go down for both employed and self-employed people. Employees Class 1 NI contributions reduce by 2% from January 2024. For the self-employed Class 2 NI on profits above £12,570 are abolished. Class 4 NI contributions go down by 1% from April 2024. These changes could save self-employed people an average of £350 a year from April.
However, the thresholds at which NI is payable will remain unchanged until April 2028. Due to inflation and pay increases to keep pace, higher rates will apply to more people.
Income Tax Self Assessment
From the 2024/25 tax year people with income over £150,000 taxed through the pay as you earn (PAYE) scheme won’t have to make an Income Tax Self Assessment (ITSA) return.
Some taxpayers, including those without a National Insurance number, won’t have to provide the End of Period Statement for making tax digital (MTD) for ITSA. New regulations are planned to allow taxpayers using MTD for ITSA to have more than one tax agent.
For self-employed people and business partners cash basis becomes the default method for working out taxable profits. Businesses that want to opt out can still use the accruals basis.
National Living Wage
The National Living Wage increases by 9.8% to £11.44 per hour from April 2024.
Pensions
In line with the pensions triple lock the basic state pension increases by 8.5% to £221.20 a week from April 2024. Employees with private pensions can also choose contributions to ‘a pot for life’ instead of automatic enrolment in their employer’s scheme. This will help reduce the number of different pension pots people collect when they change jobs.
Benefits
Universal Credit and other benefits will go up by 6.7% from April 2024, in line with September’s inflation figure.
Other measures
Alcohol duty frozen until 1 August 2024 will help the hospitality sector. A £4.5billion allocation will support manufacturers, including the automotive industry, aerospace and life sciences. A Green Industries Growth Accelerator scheme focusing on offshore wind, nuclear, carbon capture and hydrogen projects receives £960million funding. There’s also funding for innovation centres to help make the country a leader in artificial intelligence (AI) applications. There are new Investment Zones for advanced manufacturing for the West and East Midlands.
Funding for two years will help find new ways to increase apprenticeships in engineering and other UK growth sectors.
From April 2024, savers can contribute to multiple individual savings accounts (ISAs) of the same type each year. They can also partially transfer ISA funds between different providers, making it easier to change.
HMRC will receive additional funding to support tailored and efficient collection from people with tax debt.
Just give us a call if you would like to discuss how the Autumn Statement could affect your business.
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