Jeremy Hunt, the Chancellor of the Exchequer, has presented the Autumn Statement along with a revised economic forecast from the Office for Budget Responsibility.
These are the Autumn 2023 Statement key points for individuals and small/medium companies:
- Class 1 NI for employees reduced from 12% to 10% from 6th January 2024
- Class 4 NI for self-employed reduced from 9% to 8% from 6th April 2024
- Class 2 NI for self-employed abolished from 6th April 2024
- Minimum wage to increase to £11.44 per hour from 1st April 2024
- Unlimited capital allowances on all main rate expenditure
- Simplification of Research & Development (R&D) tax relief
- Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) tax schemes to be extended to 2035
- Retail, Hospitality and Leisure (RHL) business rates reduction to be extended to 2024/2025
- £163m investment in HMRC to manage tax debt
- Government contracts only given to entities with prompt payment practices
Autumn Statement 2023 – what does it mean for my business?
Martin Beales outlines here how the key measures will affect your Small/Medium company.
For individual taxpayers the budget was positive. The considerable reduction in National Insurance will make a noticeable difference to the net pay of individuals. Especially those who will also benefit from the increase of the National Living Wage.
From a small/medium company perspective, however, the budget was underwhelming.
The headline for companies from yesterday’s budget was the unlimited capital allowances (tax deductions) on asset purchases will continue into the future. In reality, the allowable rate for capital allowances had been £1m for a while, which is effectively unlimited for most small and medium companies that don’t have a budget of more than £1m per annum for asset purchases.
Extension of tax-efficient EIS and VCT schemes
There will be positives for some small/medium companies. The simplification of Research & Development tax relief is welcome, along with the extension of the generous Retail, Hospitality and Leisure rates reduction and the extension of tax-efficient EIS and VCT schemes for investors in companies.
Cash flow improvements for small contractors
There are also interesting developments from a cash flow perspective for companies and individuals. The government has demonstrated their intent to recover taxes from defaulters/slow payers by investing £163m in HMRC to recover the funds more effectively. We have noticed recently that HMRC have been more aggressive in chasing overdue VAT, PAYE, Corporation Tax and Personal Tax liabilities in comparison to COVID times. This is highlighted further still by this announcement.
From a cash flow perspective, there is an upside for subcontractors engaged indirectly in government contracts. The contractors must demonstrate that they are not making late payments to subcontractors before the government will award them the contract. This approach should eventually lead to invoices being paid within 30 days. For a long time, large contractors have crippled the cash flow of smaller contractors (usually at a cost to the subcontractor) with unfair business practices, such as slow/overdue payments.
Read the full Autumn Statment 2023.
Key points at a glance: