17th November 2022
Jeremy Hunt, Chancellor of the Exchequer, has delivered his Autumn Statement against a backdrop of economic uncertainty. Ramona Derbyshire, head of the Thrings Business Growth, gives her view on what this means for businesses.
Certainty in the economy is crucial for businesses to thrive and grow – and all eyes were on Jeremy Hunt to see whether he could deliver it in challenging circumstances after the rollercoaster of the past few weeks.
Some commentators view the Chancellor’s Autumn Statement as a message to the markets – especially as many of its key items were trailed ahead, possibly to insulate against the kind of market shock that followed Kwasi Kwarteng’s “mini budget” on September 23rd.
Businesses will be hoping that Hunt has done enough to lay a path to stability and growth in a statement that painted a rather dim picture of the UK’s economy, not least an anticipated deep recession and a funding black hole to be plugged with spending cuts and tax rises.
Thrings' Business Growth often refers to small and mid-market businesses as the engine room of the economy, and Hunt’s statement acknowledged their importance with some measures designed to help keep them on their feet during the difficult times to come.
Heralded as good news was a £13.6bn package of support for companies dealing with higher business rates, including the freezing of rate multipliers for another year. This will save businesses an estimated £9.3bn over the next five years. The Treasury also confirmed that as a result, the total increase in business rates bills will be under 1%.
However, business owners will see their tax-free allowance for capital gains reduce and the annual tax-free dividend allowance reduced to a quarter of the value over two years. Owners and senior staff will also feel the pinch as many will tip into the higher rate tax band. From April, anyone earning more than £125,140 will pay the additional income rate, down from £150,000.
A rise in National Living Wage for over 23s to £10.42 an hour from April will help low earners but add to many employers’ costs.
Despite the difficult background the Government has repeated its aim of making the UK a “science superpower”, increasing public funding for Research and Development to £20bn by 2024-25. It’s a
mixed bag though, as the R&D tax relief for SMEs deduction rate will be cut from 130% to 86% and the repayable credit rate to 10% while separately, R&D expenditure credit rises from 13% to 20%.
Government tax incentive schemes, such as the globally envied Enterprise Investment Scheme, will become even more important for individuals seeking to benefit from the generous tax reliefs offered in exchange for supporting growth focused companies.
Whether or not this budget succeeds in staving off a deeper than hoped-for recession remains to be seen, but entrepreneurs and business owners should seek advice now to plan for whatever lies ahead for their businesses and for their own personal tax and finance.