Having recently written an article on the now infamous “mini budget” in which I talked about it being very much a budget favouring business, this Autumn Statement has, in stark contrast, reverted to one of increased costs and taxes for business.
This budget confirms that incorporated business owners will see Corporation Tax rates rising to 25%, dividend tax rates rising by 1.25% across all three bands, and dividend allowances reducing by 75% over the next two years.
On top of this, the budget has provided employers with higher wage costs after announcing a record-breaking rise in the National Living Wage of 9.7%, which will undoubtedly lead to higher employment costs throughout the payroll structure.
The energy price support continues until March, and after that time is expected to offer much more focused support to those businesses that need it the most, its therefore widely expected that most businesses should prepare to see further increases in their energy costs from April 2023.
There were some positives, the Chancellor announced a £13.6bn business rates support package, of which £2.1bn will specifically assist retail, hospitality and leisure properties with reductions rising from 50% to 75% in 2023/24. This should support 230,000 properties.
Businesses might look to ways to bring down costs, such as bringing on apprentices, lowering wage costs but benefitting the employee by providing qualifications. Grants of £1,000 per apprentice are available.
Ensuring the £5,000 employers’ allowance is claimed, for businesses up to £100,000 of employers’ NI.
Investing in technology that reduces the amount of labour time required, should result in costs receiving full tax relief in the business.
For those who aren’t lucky enough to be tied into long-term cheap energy deals, investing in clean energy such as solar panels, air source heat pumps etc can be advantageous for corporation tax relief and they can significantly reduce your energy costs going forward.
Upgrading older machinery such as fridge and freezers to more energy efficient models can often pay for themselves in a matter of years.
Smaller investments into sensor-based LED lighting and infra-red heating, can add up to significant annual savings.
As we head into uncertain times, remembering the old saying cash is king, it important that cash flow forecasting is carried out to ensure surprises are kept to a minimum. We can help clients set up cash flow models.
With raising interest rates, it is essential that businesses shop around when looking for finance so that they get the lowest rate possible, again Armstrong Watson can help businesses find the best deals out there.