The 2023 Autumn Statement
The Chancellor recently unveiled the Autumn Statement, concluding with unexpected announcements, a National Insurance cut. This article dissects key takeaways from the 2023 Autumn Statement and sheds light on the support offered.
How the Autumn Statement Impacts Small Businesses and the Self-Employed
A primary focus of the Autumn Statement lies on small businesses, with the Chancellor introducing measures to fortify this crucial sector. Notable highlights include a freeze on the small business multiplier for 2024/25 and the continuation of the 75% Retail, Hospitality, and Leisure business rates relief.
Unincorporated businesses gain flexibility through the cash basis becoming the default accounting method from April 6, 2024. Under Making Tax Digital (MTD) for income tax, businesses will transition to digital records, with quarterly summaries submitted to HMRC starting April 2026. Significant ‘design changes’ aim to simplify the MTD scheme, ensuring it aligns better with the needs of taxpayers.
The self-employed also benefit from the removal of Class 2 National Insurance Contributions and a 1% point reduction in Class 4 NIC to 8%, effective April 2024. This move aims to alleviate the financial burden on the self-employed, addressing concerns of exclusion from pandemic-related schemes.
Autumn Budget Changes for Employees
Employees see a positive shift with a reduction in main Class 1 NIC rates from 12% to 10%, effective from January 6, 2024. Businesses must prepare for this mid-year change, ensuring seamless updates to payroll systems and communication with employees.
Corporate Focus in the Autumn Statement
For businesses heavily investing in plant and machinery, the Chancellor’s decision to make ‘full expensing’ a permanent fixture holds significance. This allows qualifying expenditure to be relieved at 100% of the qualifying cost each year. The Research and Development (R&D) scheme undergoes changes, emphasising the need for business owners to plan strategically in 2024.
The Role of AI in Future Growth and MTD
The Chancellor’s commitment to funding AI innovation, backed by a £500 million investment, underscores the growing importance of artificial intelligence in driving future economic growth. You should pay attention to these advancements and their potential impact on your business and the economic landscape.
What Was Missing?
Notably absent from the Autumn Statement were changes in income tax rates and bands, Inheritance Tax (IHT), and Stamp Duty Land Tax (SDLT). The possibility of revisiting these areas looms, possibly in the Spring Budget 2024.
Us keeping you informed about these developments is crucial. Understanding their implications for our clients and the broader economic landscape ensures that you are well-equipped to navigate the complexities introduced by the 2023 Autumn Statement.
If you want to know more about how this will affect your specific business, get in touch.