How might the Chancellor's Autumn Statement impact your business?

So. The big day has been and gone. In the days running up to the Chancellor's Autumn Statement, the government flew countless kites (cutting inheritance tax, income tax and benefits, to name but three). Each kite was mercilessly shot down by an unforgiving media. In the days that followed the Autumn Statement, there has been much focus on how the various measures will affect the pockets of individuals. But in this blog, we're going to explore how businesses might be impacted.

Good news on Capital Allowances

The Chancellor's decision to make the 'full expensing' capital allowances regime permanent is significant. Initially set to expire in 2026, it now offers immediate tax relief for qualifying expenditure on plant and machinery. Businesses can expect a 25% cash tax saving on these investments. This change encourages more investment, particularly in a period of high financing costs.

Clean Energy and Plastic Packaging Tax

While the full expensing regime lacks incentives for innovation and net zero targets, the clean energy sector gets a boost with other measures. However, the plastic packaging tax will increase from £210.82 to £217.85 per tonne from April 2024.

R&D Tax Reliefs – significant changes

A significant change is the merger of the R&D tax relief schemes into a new 'merged scheme', combining the SME scheme and R&D Expenditure Credit (RDEC) regime. This change means some SMEs may see reduced relief, but it also lowers the R&D intensity threshold from 40% to 30%, allowing more companies to benefit. The scheme offers a 20% before-tax credit on qualifying expenditure.

Business Rates to go up

Small businesses with rateable values below £51,000 will benefit from the freeze on the small business rates multiplier at 49.9p for 2024/25. However, most companies on the standard rate multiplier will face an increase in line with the CPI inflation rate of 6.7%.

Investment Zones and Freeports

Tax reliefs for investment zones and freeports have been extended, now offering enhanced capital allowances and relief from SDLT, business rates, and NIC for up to 10 years. This extension should attract more investment in these areas.

Tax Rate Changes

The statement includes several tax rate changes. The top rate of income tax threshold is lowered, and tax-free allowances for dividend and capital gains tax are cut significantly. Moreover, the corporation tax rate will rise for companies with profits above £250,000 from April 2023. 

National Insurance Cuts

• Employee Benefit
  The 2% cut for employees means higher net salaries, potentially boosting consumer spending.

• Self-Employed Relief
  Abolishing Class 2 National Insurance for the self-employed reduces their tax burden, promoting entrepreneurship.

• Payroll System Update
  Businesses must adjust their payroll systems to accommodate these changes, adding a layer of administrative work.

Tackling Late Payments

• Prompt Payment Culture
  Imposing strict payment terms aims to alleviate the burden of late payments on small businesses.

• Government Contract Compliance
  Companies bidding for government contracts must demonstrate timely payment practices, fostering a more reliable business environment.

Creative Industry Tax Reliefs

A new online information form is required for the creative industries to claim creative tax reliefs starting in April 2024. Additionally, the government will extend the 'sunset clause' for Venture Capital Trusts and Enterprise Investment Schemes until April 2035, providing stability in the financial ecosystem. 

Film, TV, and Video Games Tax Reliefs

Reforms in tax reliefs for the film, TV, and video games industry include introducing the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC), offering credits of 34% and 39%, respectively, from January 2024. 

Overall Business Impact

The statement's impact on businesses, especially SMEs, is significant, with increases in various taxes and a focus on promoting specific sectors such as clean energy and creative industries. Companies need to plan for these changes, considering the opportunities and challenges presented.

To find out how the UK Government's Autumn Statement might affect your business in the coming months, contact us today.