The business impact of the Autumn Statement
Fortuous • December 13, 2022
What was the business impact of the Chancellor’s Autumn Statement? We’ve highlighted the key measures your business should be working
The Chancellor of the Exchequer, Jeremy Hunt, delivered his Autumn Statement on 17 November 2022. The £30bn cost of his predecessor’s catastrophic ‘mini budget’ hung heavily over this financial statement. Mr Hunt’s job was to reinstate confidence in the Government’s fiscal capabilities and to inject some optimism into the global perception of the UK economy. To do this, he needed to deliver a clear strategy for economic success.
The elephant in the room, though, is the current challenging economic outlook for the UK.
According to the Financial Times , the latest figures from the Office for Budget Responsibility (OBR) show that:
- Gross domestic product is set to contract by 1.4% in 2023
- The UK economy is already in a recession that will last more than a year
- Output is set to recover to pre-pandemic levels only in the last quarter of 2024.
The Autumn Statement focused on ‘stability, growth and public services’. And, on the whole, big business and the City have cautiously welcomed the key announcements.
But has the Chancellor done enough to support UK enterprise?
Key Autumn Statement measures for business owners
Here are the main announcements we think should be on your radar.
- Corporation tax – the planned increase in the corporation tax (CT) rate to 25% for companies with over £250,000 in profits will go ahead. This puts the UK rate well ahead of the 21.30% EU average for CT, but higher taxation will help to bring in much-needed funds for the revenue. The CT rise in April 2023 will only affect the more profitable companies because of the Small Profits Rate.
- Value Added Tax (VAT) – the rate of VAT remains at 20%, despite rumours that this could be an area where higher taxes might raise additional revenue. The VAT registration and deregistration thresholds of £85,000 and £83,000 respectively will remain at the current levels – staying in place for a period of 2 years from 1 April 2022.
- Business rates – a package of business rates relief was announced, to help businesses cope with the current recession. The business rates multiplier has been frozen for another year and businesses in the retail, hospitality and leisure sector will be entitled to relief of 75% of their rates bills. There will also be measures to limit the cost of increases arising from the 2023 revaluation and to ease the impact of Small Business Rates Relief and Rural Rates Relief where those reliefs are lost as a result of the revaluation.
- Research and development (R&D) – reform of R&D tax reliefs has already been announced in Autumn Budget 2021, with qualifying expenditure expanded to include data and cloud costs. There will also be a refocusing on innovation in the UK, alongside improvements to compliance to target abuse of the reliefs. In the Autumn Statement, it was also announced that:
- Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%
- Research and Development Tax Relief for small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
- SME credit rate will decrease from 14.5% to 10%.
- Energy Profit Levy – the existing Energy Profit Levy (EPL) rate will rise by 10 percentage points to 35% from 1 January 2023. The investment allowance will be reduced to 29% for all investment expenditure (other than decarbonisation expenditure). The EPL is planned to end on 31 March 2028.
- Electricity Generator Levy – from January 2023, a new Electricity Generator Levy (EGL) is to be introduced, with a temporary 45% tax that will be levied on extraordinary returns from low-carbon UK electricity generation. Commentators have questioned the logic of taxing renewable energy producers at a time when the Government could be offering incentives to move away from fossil fuels. The tax will be limited to generators whose in-scope generation output exceeds 100GWh across a period and will only then apply to extraordinary returns exceeding £10 million.
- Company cars – in another less than green announcement, electric cars, vans and motorcycles will begin to pay vehicle excise duty (VED) in the same way as petrol and diesel vehicles. This measure is due to come into play from April 2025, but has already been criticised for failing to provide an incentive to switch to electric vehicles. The benefit-in-kind rate for electric and ultra-low emission cars emitting less than 75g of CO2/km will increase by 1 percentage point annually from 2025/26 to 2027/28. The rate will be a maximum of 5% for electric cars and 21% for ultra-low emission cars. The rate for all other vehicles will be increased by 1 percentage point for 2025/26 and fixed until April 2028.
Talk to us about the business impact of the Autumn Statement
There are choppy economic waters ahead for the UK’s business leaders. Navigating the coming year will be challenging, so it makes sense to review and refresh your business strategy and 2023 planning. We can help you analyse your planning and bring things up to date.
If you’re concerned about any of the Autumn Statement announcements, or want to sit down and talk through your 2023 strategy, please do contact us for a chat.
Get in touch for a planning chat.
The post The business impact of the Autumn Statement appeared first on Fortuous.
Selling your business is a big decision. If you’re incorporated as a limited company, you’ll usually be faced with two choices for how to structure this sale. You can choose between: Both routes have their own distinct tax outcomes. Having a good understanding of these implications is extremely important before you make a decision on […]
The post Selling your business: what are the tax implications? appeared first on Fortuous.
Making Tax Digital is changing how we submit tax returns. And with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) coming into force from April 2026, it’s time to start planning how you’ll meet the compliance requirements for MTD for ITSA. We’ve highlighted the four main areas where you need to take […]
The post What is Making Tax Digital for Income Tax Self Assessment? appeared first on Fortuous.
Keeping up-to-date records of your business transactions isn’t the most glamorous part of being an entrepreneur, that’s for sure. But, in reality, having accurate and up-to-date bookkeeping is actually one of the core ways to keep your finances (and your business) under control Digital bookkeeping is the future of your finance The digital age has […]
The post Getting your bookkeeping ready for a digital future appeared first on Fortuous.
Offering benefits-in-kind to your staff is a great way to make your business an attractive place to work. And these benefits add even more value if they’re also either tax-effective or tax-free. You can offer certain concessions that make benefits provided to your employees (including directors) either low-tax or no tax. To be clear, we’re […]
The post The top tax-effective benefits to offer employees appeared first on Fortuous.
When selling your limited company, you want to do so in the most tax-efficient way possible. Making use of the Substantial Shareholding Exemption (SSE) is one way to do this. Let’s dive in and see how the SSE limits the corporation tax you pay on any capital gains. Why should I consider the Substantial Shareholding Exemption when […]
The post How does the Substantial Shareholding Exemption help your business sale? appeared first on Fortuous.
A business mentor can provide guidance and support, so you make the right decisions and stay focused on the end goal as a business owner. They can also help you move forward in your career by providing advice and feedback on what steps to take to reach the pinnacle of success. But have you ever […]
The post Why your accountant is the mentor you didn’t know you needed appeared first on Fortuous.
Having proper control of your business finances is a big advantage. It helps you make well-informed business decisions and keeps your organisation profitable. With so many digital tools for managing your bookkeeping, accounting and management reporting, it’s never been easier to manage, track and forecast your financial position. But what are the main tools you […]
The post 5 ways to get in control of your business finances appeared first on Fortuous.
Whether you’re selling or buying, it’s important to make sure that any VAT invoices you issue or receive comply with the strict VAT regulations. Failing to do so can cause problems both for you and for your customers. If you reclaim VAT using a defective invoice, HM Revenue & Customs (HMRC) can disallow the claim. […]
The post What should be on a VAT invoice? appeared first on Fortuous.
Did you know that the UK corporation tax rates are changed from April 2023? From 1 April 2023, the rate of corporation tax changes from 19% to a variable rate between 19% to 25%, depending on the profits made by your business. This could mean a change to what you will owe in tax for the […]
The post New UK corporation tax rates from April 2023 appeared first on Fortuous.
The days of deciding on a tax planning at the start of the year and then forgetting about it are gone. As taxpayers and tax advisers, we both have to be nimble, flexible and aware of changes. That’s why regular tax-planning sessions are so important. The need for regular tax-planning conversations As your accountant and […]
The post Book a tax planning conversation with us today appeared first on Fortuous.