With a £27 billion tax surplus at his disposal, Jeremy Hunt used his 2023 Autumn Statement to introduce a staggering 110 measures to grow the economy.
These measures included a business support rates package worth £4.3bn, cuts to National Insurance rates, and various incentives to encourage business investment and ‘reward hard work’.
But what do these changes mean for you and your small business? Let’s dive in.
Economic backdrop
While the Chancellor’s last two fiscal statements were set against a backdrop of high Government debt and soaring inflation, the economic landscape shifted in the weeks leading up to 22 November.
With the Prime Minister’s promises to halve inflation by the end of the year and curb national debt fulfilled, Jeremy Hunt had some fiscal legroom to cut costs and extend support for businesses and individuals alike.
How does the Autumn Statement impact your business?
National Insurance changes
Some of the Chancellor’s most significant measures surrounded National Insurance contributions (NICs).
Acknowledging the vital role self-employed workers play in the UK economy, Jeremy Hunt announced a reduction in Class 4 NICs and the removal of Class 2 NICs. According to the Government, these changes are expected to cut costs for around two million people.
Another headline measure was cutting the main rate of National Insurance by 2%, which will apply to earnings between £12,570 and £50,270 from 6 January 2024 onwards.
The Chancellor claims this reduction will save the average earner £450 annually – but there is a catch. The decision to introduce the cut so soon means that employers will need to make changes to their payroll systems earlier than expected.
Business rates
The Chancellor used some of his fiscal windfall to invest in a business rates support package worth £4.3bn over the next five years.
These measures included freezing the small business multiplier for the fourth year in a row and extending retail, hospitality and leisure relief to help support vulnerable businesses.
Support for businesses
During his speech, the Chancellor said he would prioritise measures that boost business investment and growth without feeding inflation.
In light of this, he revealed that the full expensing scheme would become a permanent fixture of the corporate tax system. According to the Institute of Chartered Accountants in England and Wales, this decision will provide “must-needed” certainty for companies planning to invest in plant and machinery.
Jeremy Hunt also announced a policy aimed at tackling a long-standing issue for SMEs: late payment culture. Stricter payment timelines for bidders on large Government contracts could help alleviate cashflow issues faced by smaller businesses – although it’s unlikely to stamp out the problem entirely.
We also found out that HMRC will clarify its guidance on which training costs will count as eligible expenses for tax purposes. The Government hopes this will help businesses save money when updating skills and keeping up with the latest technological developments.
What does the National Living Wage rise mean for your business?
As part of his goal to reward hard work and ‘end low pay’ in the UK, the Chancellor announced that the National Living Wage (NLW) would rise from £10.42 to £11.44 per hour in April 2024.
He also reduced the age threshold for the NLW by two years, which means that 21 and 22-year-olds on minimum wage will be paid the same as older workers for the first time.
While many welcomed the pay increase for low earners, the decision was also met with concerns about the impact on businesses expected to foot the bill. Staffing costs are already the biggest expense for many employers, so an almost 10% rise in the living wage could make their profit margins even tighter – particularly for SMEs.
Talk to an expert today
The changes announced in Jeremy Hunt’s Autumn Statement are likely to impact businesses and individuals across the UK. Understanding exactly how different measures apply to you and how to make the most of tax breaks can make a big difference to your finances. But who has time to read through every new piece of legislation the Government issues?
As experienced accountants for SMEs, we know time is your most valuable resource. It’s our job to give you that time back, keeping you up to date and in line with the latest changes so you don’t have to stress.
We can also advise you on the best financial and tax strategies you can use to protect your bottom line and keep your firm moving forward. And if you’re an employer, our outsourced payroll services can help you stay on top of staff costs.
Will these changes affect you? Get in touch with us today to talk about your small business finances.
