For businesses, the key points in the Chancellor’s autumn statement included key tax announcements on a number of threshold and allowances measures, energy levy changes, changes to R&D tax reliefs and a package of reforms to business rates – but there are some questions to be asked about how much support it actually provides for SMEs.
From a wider perspective, Jeremy Hunt’s statement set out the government’s plans to put public spending on a sustainable footing and address the issue of national debt, while at the same time introducing measures to protect vital public services and prioritise the needs of the most vulnerable.
A focused Autumn Finance Bill will be introduced in Parliament this week to legislate for some of the measures announced. Among the key points were:
Threshold freezes and personal tax allowance measures
National Insurance contributions thresholds will be fixed at their current rates until April 2028. The government will legislate for the measure through secondary legislation in early 2023.
The National Insurance contributions secondary threshold will be fixed at £9,100 from April 2023 until April 2028. The Employment Allowance will mean the smallest employers will not be affected.
Corporate Tax changes
Reforms to R&D tax reliefs: for expenditure on or after April 1, 2023, the Research & Development Expenditure Credit rate will increase from 13% to 20%, the Small and Medium Enterprise (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. The government is continuing the review of R&D tax reliefs that was launched at Budget 2021 and will consult on the design of a single scheme.
Company Car Tax (CCT) rates: the government is setting rates for CCT until April 2028 to provide long-term certainty for taxpayers and industry in Autumn Finance Bill 2022
Van Benefit Charge and Car & Van Fuel Benefit Charges: from April 6, 2023, Car & Van Fuel Benefit Charges and Van Benefit Charge will increase in line with the September 2022 Consumer Price Inflation (CPI) rate.
A substantial package of reforms to business rates has also been announced. In short, a package worth £13.6bn has been announced, mainly in the form of freezes and reliefs to help shops and businesses that are facing in the current economic climate, and from potential business rates increases in April next year due to new valuations of their properties.
SMEs will be happy that business rates relief has been extended and the multiplier frozen for another year but given the challenges small businesses face, it looks more like a temporary solution that might not go far enough to help those that are struggling.
High Street retail businesses may feel the scrapping of the online sales tax does not do much to level the playing field, particularly as that tax was earmarked to fund a reduction in business rates for physical retail stores. And, of course, it’s not just about rates, tax hikes and threshold shifts, including a cut to the tax-free allowance on dividends, means that directors who pay themselves in dividends will face higher tax bills.
Much attention is given to the tax liabilities of big business but a lot of the points in the autumn statement will punish hard-working small business owners that are already concerned about rising costs, particularly energy bills.
Full details of the Autumn Statement are available on www.gov.uk, alongside other relevant documentation from the Office for Budget Responsibility (OBR) and the Treasury.
