In brief: What the UK Autumn Statement means for SME’s

Last week Chancellor Jeremy Hunt delivered his Autumn Statement on the status of UK finances and announced a set of new economic policies.

As we are all too aware, this was expected to be a sombre affair given the perilous state of the UK economy after Covid-19, the Ukraine War and the disastrous 7 week premiership of Liz Truss. 

During the statement, the Chancellor announced a raft of tax rises and declared that the UK economy was expected to contract by 1.4% next year.

It’s now been just under seven days since the announcement and there has been plenty of coverage and commentary over the preceding week. We therefore thought it would be useful to cut through all the noise and set out in simple terms how the budget will affect small and medium sized businesses.

If you employ staff you need to know…

National Living Wage and the National Minimum Wage are going up: 

  • The NLW will now be £10.42

  • The NMW bands for under 23’s are going up by between 9.7% and 10.9% 

  • The apprentice rate is also being raised to £5.28

The threshold for Employers National Insurance Contribution has been frozen until 2028.

If you have a physical workplace you need to know that:

Business rates are being overhauled and reviewed. The government is pledging £ 13 billion in support.

There will remain some support for the energy bills although it will be dramatically reduced from April 2023.

The planned multitude of ‘Investment Zones’ have been scrapped.

If you are an employee you need to know that:

There will be a decrease in the additional rate threshold from £150,000 to £125,140 from 6 April 2023. This means you will be paying 45% on any income over £125,140.

The threshold  at which you start paying tax has been frozen for an additional 2 years, meaning these won’t go up until April 2028. 

The planned raising of the National Insurance contribution and planned cuts to the 20% tax rate threshold have been scrapped.

If you are a shareholder you need to know that:

The Corporation Tax rate will rise to 25% for companies with over £250,000 in profits.

The Capital Gains Tax Annual Exemption amount figure is being decreased over the next few years. In April 2023 it will be lowered to £6,000 and in April 2024 it will be lowered again to £3,000.

The Dividend Allowance will be reduced to £1,000 in April 2023 and then to £500 from April 2024.

If you are involved in R&D or internal investment you need to know that :

R&D Relief is being scrutinised much more closely and the rates will be changed.

The Annual Investment Allowance (AIA) will be set to £1 million from next April.

Electric Vehicles will be subject to road tax from 2025.

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