Pic: The Independent
ICSM Business News: how the Chancellor Jeremy Hunt’s Autumn Statement affects small and medium sized businesses in ten easy takes
After the disaster of the brief tenure of Liz Truss and Kwasi Kwarteng at the helm of the British economy it was the turn of PM Rishi Sunak and chancellor Jeremy Hunt to steady the ship. So far the markets have been muted over the autumn statement of 17th November, 2022. What is for sure is that everyone including the Government are agreed it was a tax raising, public spending cutting, increased borrowing budget. That means tough times ahead as the Chancellor tries to force inflation back down to single figures. For businesses ICSM gives these ten easy to understand takes on the statement.
1 The VAT threshold is frozen at £85,000 until 2026. This will help sole traders turning over smaller amounts of cash who prefer to stay free of VAT paperwork. For those small businesses on the threshold of having to pay VAT this will be seen as stealth tax as inflation will push up costs resulting in turnover inevitably rising above the threshold.
2 Personal income tax allowance stays at £12,570 stays the same until 2028. Similar to the VAT threshold being frozen this will mean more workers on lower wages will end up paying tax as wage inflation pushes them in to the higher tax bracket.
3 Income tax threshold set to bag 250,000 people as it drops from £150,000 to £125,140 upping the numbers paying 45% on the earnings. That’s a lot of high earners paying a lot more tax.
4 Allowances clawed back. Limited Company owners can be paid in dividends but not they will need to pay capital gains tax when they sell their business assets including kit, machinery and land. The existing allowances on these sales have been cut from tax year 2024-2025. Dividend allowanced drops to £500 by that tax year and capital gains allowance drops from £12,300 now to £3,000.
5 On business rates there’s good and bad news. Multipliers will be from 2023-24 which can be seen as a tax cut although there’s no long-promised business rate reform. From next April 1 business rates will be based on the last property valuation of 2017 which are likely to be higher than in the middle of a recession – so a probable tax rise. There is though, a transitional relief scheme with rises capped based on the size of the business.
6 Business rates for retail, hospitality, and leisure business rates relief will be increased from 50% cent to 75% up to a ceiling of £110,000 in 2023-24.
7 Energy prices have shot up this year with relief for householders, but for businesses there is the Energy Bill Relief Scheme. It will remain in place until 31 March 2023, but it will be reviewed after that with only ‘vulnerable businesses’ helped.
8 The national living wage will go up to £10.42. Employers will have to find extra cash to pay it although with 11.1% inflation it’s essentially a pay cut.
9 The national minimal wage will go up next year with says the chancellor with a ‘substantial boost.’
10 To cut down on fraud and general abuse of the research and development tax relief the tax relief is to be cut. For small business research and development rate will be reduced to 86 per cent and the credit rate will be reduced to 10 per cent. The rate of the separate research and development expenditure credit will increase from 13% to 20 %.
+++++++++++++++++++++++++++++++++++
ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk