Autumn Statement reaction from James Shipp

James Shipp
James Shipp

Jeremy Hunt said that everyone would feel the pain in his Economic Statement; that is certainly true of businesses, and SMEs in particular. Given that they are the real engine of growth in the UK economy, he may find that attacking them on every front will not prove popular in the business community.

James Shipp

Going into this Autumn Statement, small business owners had already been targeted with  a significant increase in the rate of corporation tax from April next year and an across-the-board 1.25% uplift in tax on dividends.

Yesterday’s statement piled on the pain.  Perhaps it wasn’t surprising that the Chancellor chose not to extend the ‘Super-Deduction’ beyond next March (the Annual Investment Allowance remains in place, extended to £1m), but the reduction in small business R&D tax relief announced in the statement effectively reduces tax relief on R&D for small firms from 230% to 186%.

The 9.7% increase in the National Living Wage will add cost for businesses, not just at the lower end, but with a knock-on effect right across the wage structure.  Add to that the freezing of the employer national insurance threshold, and employing people is about to get much more expensive.

Meanwhile, uncertainty about energy costs continues.  The Chancellor acknowledged that bills are likely to remain high throughout 2023 by extending the residential energy cap for another year.  But businesses received no such relief, and will have to wait until the new year before they learn what – if any – further support they will receive after March.  For those renewing energy contracts right now, that lack of certainty hardly helps.

Meanwhile, business rate payers are facing big rises following the announcement that business premises revaluations will go ahead as planned next year.  There will be some transitional relief, but this is sure to be another rising cost for businesses.  Better news for those in the retail, hospitality and leisure sectors, who will see relief extended for another 12 months.

The only silver lining is what the Chancellor didn’t do: no VAT increase, no rise in national insurance rates, and no rise to headline income tax rates. But this will give small comfort to hard-pressed small businesses.

What is clear from the statement is that the Chancellor has accepted that high levels of inflation are here to stay for at least another 12 months, and there is little he can do about it.  Sadly, it seems that businesses will have to resign themselves to a tough few months ahead.

To speak to one of our specialist accountants

Wide-ranging tax planning and compliance services for individuals seeking advice and guidance from our team of experienced and highly qualified professionals.

Friendly and coherent advice and guidance on accounting and tax matters for small business owners including those starting out for the first time.

Established businesses requiring accounting and tax compliance services, forward thinking tax planning advice and the support to help your business succeed.

Our full range of enhanced corporate services aimed at large companies and those requiring audit, assurance, corporate tax advisory and diverse tax planning services.



This is a test definition