The Autumn Statement 2022 – Small Business Highlights

Kirsty Young News

Well, it happened! The Chancellor Jeremy Hunt gave his Autumn Statement in parliament this morning.

As usual this blog covers the financial impact of the Autumn Statement to the small business owner. So we don’t include things like increased public spending, increase to benefits, and the like.

The press had been predicting doom and gloom for a couple of weeks now, so how did the small business owner fare?

 

Headline announcements for the small business owner

A quick summary, with further detail to follow in future blogs.

The Bad

    • The Dividend Allowance cut in half, and then again. It goes from £2000 > £1000 > £500. From April 2023.
    • You start paying 45% tax at £125,140 – down from £150,000. From April 2023.
    • The Capital Gains Tax allowance slashed, down from £12,300 > £6000 > £3000. From April 2023.
    • Personal tax, National Insurance and Inheritance Tax (IHT) ‘bands’ frozen. Until April 2028.
    • Limited company owned electric cars will see a rise in ‘taxable benefit rates’ from 2% > 5% in coming years. From April 2025
    • Limited company owned non-electric vehicles will see a 1% rise per year as above, with a 37% cap. From April 2025
    • Reduced rates for the ‘main’ Research and Development Tax Credit schemes from 130% > 86%. From April 2023
    • Employers will still have to pay National Insurance on lower income levels than their employees do, at £9100. Until further notice.
    • The Living Wage will rise to £10.42, a rise of 9.7%. All other National Minimum Wage rates are also rising between 4.6% – 10.9%. From April 2023.
    • Business rates revaluations still happening (but see below) which could increase your bill. Watch this space.

The Good

    • Employer Allowance is held at £5000, helping keep your Employers National Insurance bill down.
    • VAT Threshold is being kept at £85,000 until 2026- you could see this as good or bad!
    • £13.6 billion support package to help ease the potential increase in business rate bills.
    • Online Sales Tax (OST) will not go ahead. (An idea to tax digital businesses that was not really practical).
    • Certain import tariffs removed for over 100 goods, making it cheaper to import.
    • A review commissioned into the causes of non-working adults.

And…

    • They didn’t raise any of the headline tax rates. AKA, it could have been worse.

 

Summary

On the surface, this Autumn Statement appears to be not as bad for business owners as was feared. There were talks of large attacks on dividend rates for example, which never materialised.

The impact of the dividend allowance change is around £165 for many limited company owners , although it can and will be more in other scenarios. Overall, not devastating.

However, if you are looking at selling anything like property, crypto, shares, etc, careful thought will be needed around when to sell it. If keeping your tax low is your goal, we reckon sooner rather than later is most likely!

The increase in electric car tax is likely not enough in most scenarios to make this something you won’t do. However, still speak to your accountant or advisor about this if you are thinking of ‘going electric’.

Finally, it’s worth noting some of these changes are likely to bring people into the self-assessment system who didn’t previously need to do a tax return. This might happen if all of their dividends were covered by the dividend allowance, for example.

 

Our own autumn statement – “Everyone can benefit from good tax planning!”

Tax planning is simply making sure you pay the tax you need to pay, and don’t pay more than you need to. That means you need to know all the benefits, rules and limits – or have an accountant that does! Ask your accountant or book a consultation with us to help you with efficient, effective tax planning for you and your business finances. .

If you don’t have an accountant, or feel you might be paying too much tax, we’d love a chat about how we can help.