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Autumn Statement 2023: Implications for Business

Autumn Statement 2023: Explore tax changes, support measures, small business rates and economic insights with Vodafone UK.

 

The Autumn Statement is considered an economic milestone for any government. It goes further than just number-crunching – it's an economic strategy for the months and years ahead. To ensure good financial planning for your small business, it's important that you understand what the latest policy announcements mean for you, so you can make the best financial business choices.

Delivered on 22nd November 2023, the Chancellor's Autumn Statement aimed to give more support to business owners and the self-employed, including cuts to national insurance, frozen business rates, national living wage increases, 'full expensing' tax breaks, and further investment in growing sectors and future tech, such as AI.
 
Here, we've broken down a few important elements that are relevant to SMEs.  

Key measures from the Autumn Statement 2023
 

  • Small business rates are being frozen for a year, with a 75% discount for leisure, retail, and hospitality industries.
   
  • Employers that hire veterans will have greater national insurance relief.
 
  • The national living wage is to increase to £11.44 per hour.
 
  • Self-employed people will receive an annual saving of £192, as Class 2 National Insurance will be abolished.
 
  • The self-employed will also get a reduction in Class 4 National Insurance – from 9%, to 8%.
 
  • National Insurance for all employees will be lowered from 12% to 10%.
     
  • As of April 2024, any organisation bidding for large government contracts needs to prove it can pay invoices in under 45 days. This number will then be lowered to within 30 days.

 
 

What does the Autumn Statement 2023 mean for small business owners?


As a small business owner, it's important to know about the impact that the statement will have on your business, and what the implications could be. Let's look at each of the Autumn Statement 2023 pledges in more detail. 
 
Investment in business
The Autumn Statement claims to back business with 110 growth measures – with more funding available for growing and emerging sectors, such as film, AI, aerospace, electric vehicles, life-sciences, and green energy. Such funding is also linked to 'levelling up' and Net Zero targets. £500 million will become available for new AI innovation centres to enable scientists, SMEs, and universities to access UK-based quantum computing and computational power. To help you get started with AI in your small business, we've compiled a guide to how AI can help your business to grow. Using generative tools like ChatGPT, for example, can help you to create engaging content while saving time and money.
 
AI does however have its limitations, so further research into its capabilities will help us all to better understand its strengths and weaknesses. In terms of quantum computing, the UK Government has a £2.5bn quantum strategy, to build the world's fastest quantum network at scale that's also capable of 1trn operations without any errors (currently, today's quickest machines are capable of only a few hundred operations that are error-free). 
 
 
UK ‍business tax rates
Full expensing will be made permanent, meaning the cost of machinery for businesses will remain tax free. This is a great boost for start-ups and SMEs that are in their early years. There will also be a small businesses rates relief – the small business multiplier will be frozen at 49.9p, and there will be an extension of the 75% discount (for retail, hospitality, and leisure) on business rates for one year. This is intended to save independent retailers more than £20,000 in 2024.

For the self-employed, Class 2 National Insurance (which is paid for profits over £12,570), will be completely abolished, saving £192 per year. Class 4 National Insurance will also be cut to 8% from 9%, which will also result in an extra £350 as an annual saving.
 
Alcohol duty has been frozen, which will be welcomed by the hospitality sector.
 
The Government is also introducing a new Research and Development tax relief, which combines the existing R&D expenditure credit (RDEC), and the Small or Medium sized enterprise (SME) schemes. Under this new merged scheme, there will be a reduction in the rate of tax paid by loss-making companies – down to 19% from 25%. The threshold for loss-making SMEs will be lowered to 30%. 
 
 
National living wage increases
As of April 2024, the national living wage will increase to at least £11.44 per hour. The national living wage is the legal minimum amount that workers can earn if they're aged over 23. If you're a small business, this could present a challenge in terms of finding more money to put down on wages. If so, you're going to need to think about budgets and where this money will come from. The first step is to get the best accountancy tools to help your business succeed. This will help you to stay on top of your business finances and focus on any areas where spend could be minimised.   

 
 
Full expensing tax break
There's a now a 'full expensing' tax break for business owners which has been made permanent. Its aim is to encourage more business investment, and to make it easier for start-ups and SMEs to get the equipment and resources they need without further costs impeding their growth. This policy enables companies to claim back any money that has been put into investments, such as new equipment, for example. The amount of money a business can claim back has no limit, which means that the more a company spends on investment, the greater its tax savings. According to the Office for Budget Responsibility, this tax break is believed to increase yearly business investment by £3 billion, and in turn should help business growth. If you're a new start up or a smaller SME looking to take advantage of this new tax break, check out our guide to investing money correctly in your business.      
 
 
Investment in manufacturing
The government has declared a £4.5 billion investment for manufacturing businesses, focusing on the automotive sector. This investment fund will be available across a period of five years from 2025. £2 billion will be dedicated to car production, £975 million will be spent on aerospace, and £960 million on green energy investment. Green manufacturing and greener services will also be prioritised. To discover more on green manufacturing and how it's shaping production cycles, read our guide on the impact of sustainable manufacturing
 

Late payment reforms
According to Simply Business, small businesses are owed as much as £45,000 at one time, and payments usually take over 21 days to settle. The Government has pledged to do more to support SMEs in this area and crack down on those paying SME invoices late.

In October, the Cash Flow and Prompt Payment Review was published. The Prompt Payment Code will be strengthened, and more powers will go to the Small Business Commissioner. In the Autumn Statement, it was announced that any company bidding for large government contracts must demonstrate that they pay their own invoices within 55 days. This will be reduced to 40 days in April 2025, and 30 days after that.
 
For more support on how the Autumn Statement 2023 affects your business, and to discover our free business support helpline, speak to one of our Business Advisers by phone, contact form or web chat.

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