This week we’ve received the government’s Autumn budget for 2023 and it’s critical that we take time to understand what this means for everybody.
The budget is a financial roadmap, laid out by the government, it outlines the country’s economic plans and priorities for the upcoming fiscal year. Understanding it and its implications can help both businesses and individuals make informed financial decisions.
The Autumn Budget is more than just a forecast of the country’s economic health; it’s a reflection of the government’s policy direction. It provides insights into the government’s spending plans, taxation policies, and strategic initiatives. It’s a comprehensive guide that helps us understand the economic landscape we are heading into.
It’s a lot of information all at once, so it can be hard to work out what affects you, how and when, we’ll be looking into what it means for businesses in the UK and summarising the key points for you.
Full Capital Expensing: This allows qualifying businesses to deduct investment in equipment, such as machinery or IT equipment, from their profits, therefore reducing the amount of corporation tax that they need to pay. This has now become a permanent incentive from the government, aimed at boosting innovation and economic growth.
Making Tax Digital: We know that the annual filing of taxes have an expiry date, and thanks to this years autumn budget, we know that the government are working to simplify the process for all self-employed and business owners, so that by the launch in April 2026, those with an income higher than £30,000 per year will be ready for Making Tax Digital.
Self-employed Tax Reform: While there are still more details to come out, the budget is also making a tax cut for the self-employed. Class-2 National Insurance will be abolished, cutting tax for approximately 2 million self-employed individuals.
Hospitality Businesses: Hospitality will also benefit as a result of the autumn budget, with business rates discounts being made available for those in the hospitality, leisure and retail sectors. Meaning the current 75% property relief in these sectors is being extended until 2025, affecting approximately 230,000 RHL properties.
Manufacturing Industry: In a huge boost to the manufacturing industry, the Chancellor announced an investment of £4.5bn to the manufacturing sector between the years 2025 and 2030.
The funding breakdown is:
Automotive – over £2bn
Life Sciences – £520m
Clean Energy – £960m
Aerospace – £975m
Investing in Green: Businesses working on green technologies will see an investment of £1m.
Research & Development Tax Relief: In a bid to simplify the scheme and improve the incentive, changes have been made to the scheme.
The intensity for the threshold has been reduced from 40% to 30%, with SME tax credit at 14.5%, with support for loss making SME’s that have used the scheme continuing.
The overall message of the budget was clear; investing in economic growth and boosting GDP.
So what does this mean for businesses?
The government has allocated significant funding for British manufacturing, aiming to boost productivity and competitiveness in this sector. This funding can support businesses in modernising their operations, adopting new technologies, and expanding their manufacturing capabilities.
The budget includes permanent tax breaks for businesses, such as reductions in corporate tax rates and incentives for research and development. These measures aim to promote investment, innovation, and profitability for businesses. The government has committed to significant infrastructure development, including transportation, digital connectivity, and green technologies. Improved infrastructure can enhance efficiency, accessibility, and connectivity for businesses, facilitating their operations and growth.
Importantly, the budget includes support for Small and Medium Enterprises (SMEs) such as simplified regulations, access to finance, and initiatives to promote entrepreneurship. These efforts can benefit small businesses by reducing barriers, enhancing competitiveness, and fostering growth opportunities.
Overall, the Autumn 2023 budget was heavily focused on creating a supportive environment for UK businesses by providing tax breaks, funding for manufacturing and green tech, skills development, infrastructure improvements, and support for SMEs. These measures are designed to stimulate growth, enhance innovation., and enable businesses to thrive in the evolving economic landscape.
Other notable points:
Employee National Insurance Contributions: NI contributions will receive a 2% tax cut, which will save over £450 for 27 million people. However, it is important to note that the benefit will be overshadowed by the effect of existing freezes on personal tax thresholds, known as fiscal drag. In particular, not so long ago there was a national insurance increase for the NHS (NHS tax) which is basically bringing the contributions back to the way it was before covid.
Pensions: The Triple Lock pension guarantee, which ensures that the state pension increases by the highest of inflation, average earnings, or 2.5%, will remain in place, resulting in an 8.5% increase in the state pension in April 2024.
ISA’s: From April 2024 savers will be allowed to pay into multiple ISA’s of the same type within a single tax year, without losing the £20,000 allowance. This should encourage some competitive interest rates among providers. You will also be allowed to partially transfer part of your balance from one provider to another.
If you’re a business owner, and have questions about the 2023 Autumn Budget from the Chancellor, don’t hesitate to get in touch with us. We’re on hand to work with you about any effect it may have on your business, and help you to cautiously plan for your business future.
Jason Cannon
Managing Director and Figures UK Founder
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