How the Autumn Statement Will Affect Small Businesses

Having recently taken over from Kwasi Kwarteng , Jeremy Hunt, the UK Chancellor, delivered his much anticipated Autumn statement last week. According to Hunt, we are currently in recession and the Office for Budget Responsibility predicts that the economy will decline by 1.4% next year before returning to growth in 2024, with inflation expected to drop from 9.1% this year to 7.4% next year.

Some key takeaways for small and medium sized enterprises (SME’s) are:

·         The energy support bill will be continued until March 2023 but will then be phased out for many businesses. Continued support beyond 2023 is expected to be reserved for only those businesses that really need it.

·         Dividend allowance will be reduced from the current £2000 to £1000 in 2023 and to £500 in 2024.

·         The VAT threshold for businesses was suspended at £85,000 until 2024 and this has now been extended until 2026. This is the turnover threshold that businesses need to register to pay VAT.

·         The national living wage for adults (over 23 years old) will rise by 9.7% from next April rising to £10.42 per hour. This will give many low paid workers a pay rise.

·         The Personal Tax Allowance was frozen at £12,570 until 2026 and this has now been extended until 2028. This is the amount of money you need to earn before you qualify to begin paying any tax at all.

·         The rate of corporation tax will increase for businesses earning over £250,000 from 19% to 25% from next year.

·         The government will remove import tariffs on over 100 goods for two years to help with rising costs. These include raw materials such as metals and foodstuffs which make up many ingredients.

Generally the feeling amongst political commentators is that the government hasn’t changed headline tax rates much, but rather they’ve tinkered with the various thresholds and allowances. It is projected that over the next few years businesses will get to keep less of their money than before.

It remains to be seen how these policies will affect all small businesses as there are many other variables but it is generally predicted to be a tough time for SME’s over the next few years.