In March, Chancellor Jeremy Hunt delivered his Spring Budget 2023. From tax changes to energy support, we take a look at the main points which will affect small businesses and see how the government plans to provide support in these challenging times.
In the Budget 2023, it was confirmed that Corporation Tax rates will increase from April 2023, with an increase from 19% to 25% for businesses that earn over £250,000 in profits. It is claimed that only 10% of businesses will pay the full rate of 25%.
For businesses with profits between £50,000 and £250,000, Corporation Tax will increase on a sliding scale between 19% and 25%. There will be no change for those small businesses making a profit of less than £50,000.
The 5p fuel duty cut on petrol and diesel will remain in place until April 2024, which the Chancellor says will save the average driver £100 in the coming year.
During the Spring Budget 2023, the Chancellor unveiled plans to encourage investment for businesses in England.
12 locations will host an Investment Zone and will receive £80m in funding over five years, made up of a combination of spending and tax incentives.
The zones in England will be the West Midlands, Liverpool, Greater Manchester, Tees Valley, the North East, the East Midlands, South Yorkshire and West Yorkshire. There will also be at least one investment zone in Scotland, Wales and Northern Ireland.
New Investment Allowance
For businesses that invest in new IT equipment, plant or machinery, it was announced in the Budget 2023 that there will be an investment allowance which will provide tax relief.
This measure will temporarily increase the relief available for capital expenditure on plant and machinery in the year the expenditure is incurred. For qualifying expenditure incurred on or after 1 April 2023 but before 1 April 2026, companies can claim a 100% first-year allowance for main rate expenditure (full expensing), and a 50% first-year allowance for special rate expenditure.
The Pension Lifetime Allowance will increase from £40,000 to £60,000 from 6 April 2023, and will be removed in its entirety from April 2024. These reforms are geared towards keeping skilled individuals at work without fear of being penalised for saving too much in their pension funds.
There was no update in the Spring Budget 2023 regarding more support for businesses and their energy bills, which means that the previously agreed Energy Bills Discount Scheme for business will go ahead as planned from April 2023 to the end of March 2024.
Under this new scheme, a cap to the unit cost of gas and electricity will be replaced by a discount on wholesale gas and electricity prices. Businesses using a greater amount of energy for their production methods, such as steel or glass companies, will be given a larger discount than other industries.
Free training for over 50s
Another announcement from the Spring Budget 2023 concerned with keeping people in the workplace involved support for more skills boot camps and apprenticeships aimed at the over 50s.
More funding will be in place for people of all ages looking to upskill or find a new job opportunity.
Reduced childcare costs
In a bid to help working parents, the Chancellor stated in his Spring Budget 2023 that there would ultimately be 30 hours free childcare for working parents with one and two year olds by September 2025.
The new scheme will be introduced in phases from April 2024, and will begin with 15 hours of free childcare.
How will the Spring Budget 2023 affect your small business?
We’ve highlighted some of the key announcements from the Spring Budget 2023 which will most likely influence smaller businesses.
These are challenging times and whilst help with childcare costs, the new investment allowance and some extra help with energy costs are welcome, many small businesses are worrying that the new measures are not enough.
Office Assistants are experts in helping smaller businesses with bookkeeping, accounting and tax matters. If you’re unsure about how any of the announcements in the Spring Budget 2023 will affect your business, please get in touch for a friendly chat.