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The Autumn Budget Summary 2023

Jeremy Hunt’s budget on Wednesday provided changes for small UK businesses.

Prior to the budget there where media rumours of headline making cuts in corporation tax to abolishing Inheritance tax. However, Mr Hunt has opted for a focus on incentives to drive growth.

‘Full Expensing’ and Capital Allowances

Following on from the Spring Budget, full expensing has been made permanent. This provides up front relief for 100% of the cost of qualifying capital expenditure and a generous 50% on special rate expenditure.

Of course, the capital expenditure which many of our customers ask about are excluded, like land and buildings, cars and leasing.

However, there is a stick to the carrot. If you later sell the asset a balancing charge will arise. In other words, when you sell your business you will be taxed on the proceeds. Leading to a claw back of tax on disposal.

R&D Reform

It is widely acknowledged that the Research and Development scheme has been abused for some time. As such, the government have sought to reform.

On Wednesday we learned that the two schemes SME and RDEC will be merged into a single simplified scheme, starting with periods after 1 April 2024. This new scheme will be completely ‘above the line’.

Importantly, there will be continued support for R&D intensive SMEs. Including lowering the threshold of R&D expenditure required to qualify from 40% to 30%. We believe this is a positive step which will aid 'pure' R&D companies to benefit more from the scheme.

Unfortunately, it is a quick turn around of change, being just over 4 months away. Businesses will have to act fast to plan for the April 2024.

National Insurance

A 2% cut in employees’ national insurance from 12% to 10% for earnings between £12,750 and £50,270. The class 2 national insurance for the self employed has been removed. Class 4 national insurance has been reduced from 9% to 8%.

A welcome tax cut for employees and the self-employed. However, not incredibly exciting in real terms with the cost-of-living increases in the past 12 months.

It's important to be aware of the changes which affect you and your business. If you need help navigating the world of small business and tax, Get in touch today.

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