Autumn Budget 2023

The Chancellor Jeremy Hunt delivered his Autumn Budget on Thursday. We at Adams Moore have looked at what the headlines could mean for you.

Businesses

Full expensing; which means that when a company buys machinery or plant, they can take the cost out of their pre-tax profits, saving them having to pay tax on the equipment, will be made permanent. Therefore, no real-world change.

In relation to business rates, Mr Hunt said the 75% discount on rates up to £110,000 have saved shops an average of £20,000. The 75% rates discount for retail, hospitality and leisure will all be extended for another year. It is estimated that this will save the average independent pub over £12,800 next year.

National Insurance

One of the most anticipated measures in the budget was changes to National Insurance.

Firstly, for the self-employed, the Class 2 National Insurance, currently £3.45 a week for those earning more than £12,570, will be abolished entirely. Mr Hunt said, “this is in recognition of the contribution made by self-employed people to our country”.

However, it did not stop there for those who are self-employed, as Mr Hunt announced changes to Class 4 National Insurance also, reducing the rate from 9% to 8% for earnings between £12,570 and £50,270.

It is estimated that this reform will save around 2 million self-employed people an average of £350 a year from April.

National Insurance for employees will be cut from 12% to 10% on earnings between £12,571 to £50,270. Therefore, an individual with an average salary of £35,000 will save over £450 as a result of the reduction. Mr Hunt also then confirmed that tomorrow he will introduce “urgent legislation” to bring the measure in from 6 January next year, rather than from April when the new tax year begins.

State Pension & Universal Credits

The triple lock (the rate state pension is to increase by being the highest of inflation, earnings or 2.5%) will be honoured in full, and therefore, the full new state pension will be increased by 8.5% to £221.20 a week, worth up to £900 more a year.

Due to the continuing cost of living pressures, Universal Credits will go up by September’s higher inflation rate, 6.7%, rather than the lower October rate. It is estimated that this would be worth £470 to those individuals.

Summary

There are some tax savings for individuals whether as an employee or self-employed, which is always welcomed. The noise around Inheritance Tax was this year was a “red herring”. Finally, the tax rate bands remain unchanged.

So, no big election give away in our opinion, for business!