Budget

Autumn Statement 2023: Focus on Growth

Rumours in the run up to the latest Statement from the government were pretty thin on the ground, and the ones that were floating around  turned out to be wrong. Jeremy Hunt remained tight-lipped when he appeared on Sunday with Laura Kuenssberg, but Prime Minister Rishi Sunak had said on Tuesday that taxes were now able to be cut following a slowdown in inflation.

While on the surface it looks as if taxes have been cut, digging a little deeper shows this might not be the case. And although some business rates have been frozen, there’s also the rise in minimum wage to consider.

What does the budget mean for Caroola clients? 

National Insurance

National Insurance Contributions (NICs) offered the biggest benefits across the board.

Class 2 and 4 NICs

For the self-employed; Class 2 National Insurance Contributions have been fully abolished and Class 4 NICs have been reduced from 9% to 8%. This will reportedly be a saving of £350 per year on average. These changes are due in April 2024.

Reading the government’s full statement has left some room for manoeuvre however, as they have said they will set out “next steps on Class 2 reform next year”, so it remains to be seen how permanent the abolition will be.

National Minimum Wage

Announced previous to the budget, the National Living Wage has not only risen from £10.42 to £11.44 per hour, that wage has also been extended down to include 21 and 22 year olds who were on £10.18 per hour. Although this is a positive move for employees generally, its effect on small businesses could further diminish already tight margins. At a time where costs have skyrocketed across supply chains, small businesses will feel the squeeze more than most.

Apprenticeships

So although small businesses might feel the pinch on minimum wage, there is the opportunity to offer more apprenticeships with the chancellor promising £50 million over the next two years to increase the number of apprentices in engineering “and other key growth sectors”. Apprenticeship advantages include training the next generation in your profession whilst keeping costs down and productivity high. What’s more, there is government funding and further schemes such as the FCSA Levy Network which Caroola is proud to be a part of.

Pensions

Pensions rose more than expected with the chancellor using the triple-lock to increase them by 8.5% from April 2024 – there was speculation that he may only have given a 2% rise; conventionally, they tend to rise either by rate of inflation or 2%, whichever is higher. Regardless, this will see pensions rise by about £900 per year on average.

Furthermore, more control has been given to employees when deciding which pension provider to use. Whereas previously, employers have dictated which provider they would pay employee contributions into, employees can now request their own choice of pension provider. This will reduce the number of unconsolidated pensions the employees may have from changing jobs with different providers.

Business

Jeremy Hunt announced over £20 billion worth of support for businesses, including a freeze on the small business multiplier at 49.9p and more “investment zones” in the aerospace, medical research and green industries. These will be placed in the East and West Midlands and Greater Manchester, which could be seen to be part of the government’s “levelling up” agenda. It’ll be interesting to see how useful they’ll be with no HS2 going up to Manchester.

The temporary “full expensing” scheme has now been made permanent, “Full expensing” has been made a permanent benefit meaning that businesses can claim back 25p per £1 spent on IT equipment and machinery in corporation tax. This encourages businesses to invest into their businesses by providing them with tax relief, and assisting with their cashflow by giving them the tax relief in the first year.

The late payment terms imposes stringent payment timelines on public sector tenders worth over £5 million. Small businesses can be unfairly impacted by payment delays, and these terms will see the deadlines gradually fall to 30 days over the coming years.

Planning rules are being overhauled to invite more investment in “critical infrastructure”. Planning applications will have a quicker turnaround time and fees will be refunded if the application isn’t processed within a target timeline, whilst still having the application processed.

“A prompt service or your money back – just as would be the case in the private sector,” says Jeremy Hunt.

Conclusion

It seemed a very cautious autumn statement, with a lot of focus on small businesses and the self-employed. With an election just around the corner, is the government holding back to use better benefits as campaign promises? Only time will tell.

If you have any questions about how this will affect you, please get in touch.

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