How will the Autumn Statement 2023 affect your business?
The Chancellor, Jeremy Hunt, has laid out plans for the UK economy in the Autumn statement. Growth was key to the statement, along with tackling inflation and the cost of living crisis.
There was a promise to back British businesses with 110 growth measures, designed to remove planning red tape, boost productivity, and cut business taxes. Hunt outlined that the Office for Budget Responsibility (OBR) forecasts that the combined impact, will raise bus investment, put more people in work, cut inflation, and increase GDP, among other things.
But what exactly does all that mean? And will it benefit small business owners? We'll report the facts and let you make your own mind up.
2023 Budget breakdown for business owners
Here’s all you need to know about how the Autumn Statement will affect your business.
National Insurance Contributions
There was no change to National Insurance thresholds but contributions for some employees will be cut.
The main employee National Insurance rate will be cut from 12% to 10%, from January 6, 2024.
As an employer, you will still pay NICs at a rate of 13.80% for all employees who earn more than £8,840 per year (excluding those aged 21 or under and apprentices aged 25 or under).
The Employment Allowance will stay at £5,000 until March 2026. This means eligible employers can cut their employer NICs bills by up to £5,000 per year, a tax cut worth up to £1,000 per employer.
If you’re self-employed, there are changes to both "Class 2" and "Class 4" rates, which will kick in from April :
- "Class 2" National Insurance paid by self-employed people earning more than £12,570 will be scrapped. That will get rid of a flat rate compulsory charge of £3.45 a week.
- "Class 4" National Insurance will be cut from 9% to 8%. This is payable on profits between £12,570 and £50,270. It will stay at 2.73% on profits over £50,270.
The national living wage - the minimum amount that can be paid to workers who are 21 and over - will rise by 9.8% from April 2024, when the following will apply:
- £11.44 per hour for employees aged 21 and over
- £8.60 per hour for employees aged 18-20
- £6.40 per hour for employees aged under 18
- £6.40 per hour for apprentices
Business rates are a tax on property used for business purposes, such as offices, shops, pubs, and warehouses. You can check out the government website for more information on business rates.
Business rates are calculated by using a multiplier. The rateable value of your business property is multiplied by this number to give you your final bill. If the rateable value of your property is below £51,000, your bill will be calculated using the small business multiplier. This is lower than the standard multiplier and the Chancellor announced this will be frozen for another year.
The Retail, Hospitality and Leisure business rates relief scheme will be extended for another year. This gives eligible properties a 75% relief on business rates, up to a cash limit of £110,000 per business.
The Chancellor estimates that this will save the average independent shop more than £20,000, and the average independent pub more than £12,800 over the next year.
The main rate of corporation tax will stay at 25%, payable by limited companies on any profits over £250,000 made from trading and the sale of assets or investments.
If your company has profits of £50,000 or less, you’ll pay a small profits rate (SPR) of 19%. Any profits between £50,000 and £250,000 will be charged at a higher rate of 25%. Marginal relief is offered to make this an incremental increase to soften the impact.
Full capital expensing for businesses has been made permanent. This means that every £1 a company invests in IT, plant or machinery can be deducted in full from taxable profits.
Investment in business
The Chancellor announced several areas that will benefit from investment over the coming years:
- £500 million will be invested over the next two years to fund AI innovation centres
- £960 million will go to the Green Industries Growth Accelerator for offshore wind and electric networks, nuclear, carbon capture, utilisation and storage (CCUS), and hydrogen technologies
- £4.5 billion to attract investment in strategic manufacturing sectors. £2 billion will be invested in zero emissions technology in the auto industry
Income tax is a tax you pay on your earnings. It was announced in last year's Autumn Statement that the following rates will be frozen until 2027/28:
|Band||Taxable income||Tax rate|
|Personal Allowance||Up to £12,570||0%|
|Basic rate||£12,571 to £50,270||20%|
|Higher rate||£50,271 to £125,140||40%|
|Additional rate||over £125,140||45%|
The state pension will increase by 8.5% next year and the Chancellor announced a consultation to give "savers a legal right to require a new employer to pay pension contributions into their existing pension so they have just one pension pot". This could bring more admin headaches for business owners.
The Energy Bills Discount Scheme is set to end on March 31, 2024. There’s been no announcement from the government regarding further support after this date. Remember, this scheme is not a price cap. Instead, it offers a discount on gas and electricity for qualifying non-domestic contracts.
The energy market has been a lot less volatile this year, and prices have largely been coming down since they peaked in late 2022. But wholesale prices are still around twice as much as they were at the start of 2021 and suppliers' out-of-contract rates are about 40% higher on non-domestic contracts.
If your current contract is coming up for renewal, it still makes sense to compare business energy prices to find the cheapest possible fixed rates.
The current price cap on domestic energy was cut from £1,976 to £1,834 for the period from October 1 to December 31. An announcement on the rate for January 1 to March 31, 2024, is due any day now.
Energy consultancy Cornwall Insight expects Ofgem to announce a 5% rise to push the cap back up to £1,931 for a typical dual-fuel household. The regulator is also considering a further adjustment to the cap to help stop suppliers going bust. This could see a further increase in domestic bills, but this isn’t expected until April 2024.
As announced in last year’s Autumn Statement, the rate of Dividend Tax will be cut from £1,000 to £500 from April 2024. This means you’ll then pay tax on any dividend income over £500.
Capital Gains Tax
If you sell shares at a profit, you’ll be charged capital gains tax on the money you make. If you’re a higher-rate taxpayer, you’ll pay a 20% capital gains tax on profits from shares. The tax-free threshold will be cut to £3,000 from April 2024.
Research and Development Tax Relief
The Research and Development (R&D) tax relief scheme for SMEs offers support for companies that work on innovative projects in science and technology. This will be merged with the Research and Development Expenditure Credit (RDEC)to cut complexity and encourage more businesses to claim.
Cigarettes and alcohol
Alcohol duty will be frozen until August 1, 2024. Check out the government's website for a full rundown of the current alcohol duty rates.
Tobacco duty has been put up by 10%.
How to cut your business costs
No matter what you make of the Autumn Statement, it's always worth working out how you can cut your business costs. Switching business essentials with Bionic is a good place to start.
We compare business gas, business electricity, business insurance, business VoIP, and business phone and broadband to help you find the best deals from our panel of suppliers. We also compare business finance with Think Business Loans.