Yesterday, the Chancellor delivered his second Autumn Statement against a more financially stable background compared to 12 months ago. His speech certainly had election 'feels' to it with some political analysts predicting the UK will be heading to the polls early in May 2024. So, was this a speech to warm up the electorate and bring in the swing voters?
Only 8 weeks ago, Jeremy Hunt argued that tax cuts in the short-term were 'virtually impossible', despite the UK tax burden sitting at its highest level in 70 years. However, having recently delivered on his commitment to halve inflation, the Chancellor made something of an abrupt u-turn.
At the despatch box, Jeremy Hunt presented a raft of measures designed to underpin economic growth - 110 to be precise - including notable cuts to National Insurance and positive changes to the full expensing capital allowance.
For the benefit of our readers, we've picked out and summarised the key takeaways most applicable to UK SMEs. So, without further ado . . .
Capital Allowances - Full Expensing
Full expensing - originally announced in the Spring Budget - was due to expire on 31st March 2026 but has now been made permanent.
This allowance enables qualifying businesses to deduct 100% of certain equipment costs, from company profits, in order to reduce their overall Corporation Tax bill - A saving of 25p for every £1 spent.
In addition, businesses investing in equipment that doesn't qualify for the full 100% e.g 'long-life assets', currently benefit from a reduced 50% first-year allowance - This is set to continue.
Business Rates Relief
For financial year 2024-2025, the small business multiplier will remain at 49.9p for a fourth consecutive year.
The standard multiplier will increase inline with the September Consumer Prices Index (CPI) to 54.6p.
The 75% relief currently in place for eligible Retail, Hospitality & Leisure (RHL) properties will continue into financial year 2024-2025.
National Living Wage
From April 2024, the National Living Wage will increase from £10.42 to £11.44, applying to workers aged 21 and over.
National Insurance
Class 1
From January 2024, Class 1 employee's contributions will be reduced from 12% to 10% on earnings between £12,570 and £50,270.
The rate will remain at 2% for earnings above £50,270.
Class 2
From April 2024, Class 2 self-employed contributions will be abolished.
Currently, self-employed workers with profits above £12,570 pay a weekly flat rate of £3.45 but this will be scrapped from 6th April.
Despite this change, self-employed workers will continue to have access to contributory benefits, including the State Pension.
Class 4
From April 2024, Class 4 self-employed contributions will reduce from 9% to 8%.
As a result, self-employed workers with profits between £12,570 and £50,270 will pay at the new 8% rate.
The rate will remain at 2% for earnings above £50,270.
A full breakdown of the Autumn Statement 2023 can be found on the Government website here - To understand how the above changes might impact your business, we recommend speaking to your company accountant in the first instance.
Further, if these new measures are likely to impact your future finance requirements - particularly the full expensing capital allowance - please don't hesitate to get in touch with the team at KeySME Business Finance. We're here to help!
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