30.11.2022 | TAX

What does the Autumn Statement mean for your business?

Beatons Group’s Andrew Diver unpicks the ramifications of last week’s much anticipated Autumn Statement. 

This month Chancellor Jeremy Hunt made his first Autumn Statement.

Many new measures were announced in a mixed bag of a statement, from tax rises for the highest earners to more targeted cost of living support and potential council tax hikes.

And for businesses, there was also much to take in, with many now looking ahead to future changes, albeit with not too much changing in the immediate future.

But planning is key, and here, the head of taxation at Beatons, Andrew Diver, gives an overview of the announcements to be aware of.

Employment

Employer’s National Insurance Contribution (NIC) is frozen until 2028. The first £5,000 of employers’ NIC is covered by the employment allowance, but with wage inflation increased, employers’ NIC will further increase costs down the line.

The national living wage is to be increased by 9.7% to £10.42 per hour, which will increase staff costs as well as continued pressure from inflation.  

VAT

The VAT threshold has been frozen at £85,000 until 2026, but this will mean more businesses are likely to need to register if they aren’t already.

Corporation Tax

Corporation Tax increases will still come into effect from April 2023, increasing to 25% for companies earning over £250,000. Companies earning under £50,000 will still pay 19%. Those earning between £50,000 and £250,000 have the highest marginal rate of tax at 26.5%.  

Motoring

As a sign of the times, vehicle excise duty will be charged on electric cars from April 2025.  

Electric cars will also not be excluded from the expensive car VED supplement, which applies when a car has a list price of more than £40,000. This adds a further £335 to the vehicle excise duty. 

Company cars

The benefit-in-kind rates for company electric vehicles are also set to increase from the current levels of 2% to 5% though not until 2027/28.

Despite the planned changes, electric cars are still very efficient company vehicles, and the charging network is continually improving. The treasury is aiming to increase the network of chargers further by continuing its scheme of first-year allowances for employer-supplied charge points for a further two years to March 31, 2025.

Tariff suspensions

Tariff suspensions will be coming into effect, possibly from January 2023. These will remove tariffs on more than 100 goods for two years to help put downward pressure on imported component costs for UK producers.

The super-deduction

The super-deduction is a generous tax allowance which permits companies to claim up to a 130% deduction against profits for qualifying plant and machinery purchased between April 1, 2021, and March 31, 2023.

If you are contemplating investing, you should consider the impact of the super-deduction and the transitional arrangements for this as to the optimal timing for tax relief purposes. The decision on when is the optimal time to invest will depend upon your marginal rate of tax after April 2023 (whether 19%, 25% or 26.5% see above).

Business rates

The Business rates revaluation is still set to go ahead in 2023. Rates are likely to increase for some, but there will be some transitional relief.

Energy

For individuals, a targeted package of support will continue, though the blanket £400 payment for all households will end. There is an acknowledgement that some businesses will need support beyond March 2023, but the government says this will be targeted and much lower than currently being provided.

Dividends

The dividend allowance will reduce from £2,000 to £500, meaning more taxpayer dividends will be liable to tax.

Fuel Duty

Finally, one of the aspects that were not covered in the Autumn Statement but have been forecast by the Office of Budget Responsibility (OBR) is that from April 2023, fuel duty is set to increase by 5% plus inflation.

As this is also liable to VAT, the fuel cost could increase in the region of 20p per litre. We await further news on this and hope this is not implemented in April.

For advice on any of the above or any general accountancy queries, please contact Beatons via info@beatons.co.uk or call 01473 659777.