Autumn Statement 2022: Everything busy business owners must know.

Autumn Statement 2022: Everything busy business owners must know.

AccNet rounds up the most relevant 2022 Autumn Statement changes.

The Autumn Statement 2022 came at a time of significant economic challenge for the UK and global economy. Chancellor, Jeremy Hunt, gave his long-awaited full fiscal statement on 17 November in the House of Commons.


Hunt’s opening remarks:

The Chancellor said that he wants “low taxes and sound money – but sound money has to come first.”

The chancellor further said his priorities are stability, growth and public services, and is providing “fair solutions” despite taking “difficult decisions”.

Following reversals to the mini-Budget, the Chancellor’s announcements included:

  • Increases to the National Living Wage and Corporation tax
  • Reduced dividend, capital gains tax (CGT), and research and development allowances
  • Frozen employer’s National Insurance contribution (NIC) threshold
  • Vehicle excise duty for electric vehicles.

Now let’s take a look at the headline announcements for UK businesses, so you know what to expect as you navigate through these challenging times.

Let’s pin down a Summary of Business Taxes first…

Corporation tax rise

As stated in the previous budget, the main rate of corporation tax will increase from 19% to 25% in April 2023. If your business is a limited company, you’ll be hit by this hike next year and this higher rate is payable on any profits over £250,000 made from trading and from the sale of assets or investments.

If your company has profits of £50,000 or less, you’ll pay a small profits rate (SPR) of 19%. Any profits between £50,000 and £250,000 will be charged at a higher rate of 25%.

What does this mean to me?

Compared to the current flat rate of 19%, this new rate system will add significant cost and complexity to businesses.

VAT threshold will be frozen

The VAT registration threshold will remain at £85,000 until 31 March 2026.

As small businesses reach the threshold, they’ll need to meet certain obligations – including registering for VAT, charging customers VAT on sales, submitting VAT returns using Making Tax Digital compliant software, and paying the difference between input and output VAT over to HMRC.

On the plus side, though, VAT registered businesses are able to reclaim input VAT.

What does this mean to me?

This means more businesses will find they need to register for VAT – resulting in more revenue for HMRC – due to high levels of inflation.

Investment in business

The Research and Development (R&D) tax relief scheme for SMEs offers support for companies that work on innovative projects in science and technology. The deduction rate for the scheme will be cut from 100% to 86% and the credit rate will be cut from 14.5% to 10%.

If your business gets an R&D expenditure credit, this will be increased from 13% to 20%. Find out more about R&D expenditure credits at the government website.

Next, we find out what changes were made to Wages and Payroll.

Income tax changes and then freezes.

In the mini-Budget, the 45% tax rate for taxable income over £150,000 was to be removed. It was later reinstated by the Chancellor.

In the Autumn Statement under discussion here, it was announced that from April 2023, the additional rate threshold for the 45% tax rate will be reduced. It will move from £150,000 to £125,140.

Meanwhile, all other income tax thresholds will be frozen until April 2028 at their current rates.

What does this mean to me?

As a result of high inflation, a freeze in rates and thresholds means the government will end up collecting more tax.

National Living Wage and National Minimum Wage increases.

From April 2023, the National Living Wage (NLW) – which is the minimum you must pay any employee aged 23 and over – will rise from £9.50 to £10.42 an hour from 1 April 2023. This could mean that businesses need to find an extra £1,600 a year to cover the annual earnings of a full-time worker.

There will also be changes to the National Minimum Wage (NMW), which is bracketed by age group. The NMW will rise from:

  • £4.81 to £5.28 an hour for apprentices
  • £4.81 to £5.28 an hour for under-18s
  • £6.83 to £7.49 an hour for 18- to 20-year-olds
  • £9.18 to £10.18 an hour for 21- to 22-year-olds

National insurance thresholds and rates change.

The NIC thresholds and class 1 rates will be frozen at the current levels until 2028.

Class 2 and 3 NIC rates for the self-employed will be uprated to £3.45 and £17.45 per week respectively from April 2023.

Employer’s National Insurance Contributions (NICs) threshold, frozen.

The Chancellor froze the employer’s NICs secondary threshold at its current rate of £9,100 a year until 2028. This means, for eligible employers with employer NICs over £5,000 a year, employment costs will rise as salaries and wages increase between April 2023 and April 2028.

Employment allowance to remain the same.

The employment allowance will remain at £5,000 for 2023/24. This will continue to protect 40% of businesses from paying any NICs at all, said the Chancellor.

Dividend allowance, cut.

The dividend allowance will reduce from £2,000 to £1,000 from April 2023 and to £500 from April 2024. This allowance was £5,000 when introduced in April 2016, but it reduced to £2,000 from April 2018.

What does this mean to me?

Cutting the allowance will increase the tax burden on limited company owners who pay themselves using dividends. It comes on top of the 1.25% increase in the dividend tax rates introduced in April 2022.

Capital Gains Tax-free allowance will be reduced.

The Annual Exempt Amount, i.e. your tax-free allowance, for Capital gains tax will be reduced from £12,300 to £6,000 from April 2023, and again to £3,000 from April 20243. If you are self-employed or a sole trader, you pay capital gains tax whenever you make a profit by selling all or part of a business asset. These assets can include land and buildings, fixtures and fittings, shares, and registered trademarks.

Meanwhile the Dividend Allowance, which is your tax-free allowance for any income related to dividends, will be cut from £2,000 to £1,000 from April 2023, and to £500 from April 2024.

Apart from the above, there were some noteworthy additional announcements you need to know about.

 One of the biggest announcements in Hunt’s autumn statement was a £13.6 billion package of targeted business rates support in England, to be spread over the next five years.

According to the Chancellor, the package is designed to “support businesses as they transition to their new bills, protect businesses from the full impact of inflation, and support our high streets.”

Here are the latest announcements on business rates:

  • Multipliers will be frozen from 2023-24 which the Treasury says will be a “tax cut worth £9.3 billion over the next five years”
  • A transitional relief scheme will cap bill increases caused by changes in rate-able values at the 2023 revaluation (bill increases for the smallest properties will be capped at five per cent, while increases for medium-sized and larger properties will be capped at 15 per cent and 30 per cent respectively)
  • Retail, hospitality, and leisure business rates relief will be increased from 50 per cent to 75 per cent (up to £110,000 per business) in 2023-24
  • If businesses lose their eligibility for small business rates relief as a result of revaluation, bill increases will be capped at £600 per year from April 2023

In simple, here’s your key-takeaway:

Overall, the Autumn Statement didn’t contain huge surprises, but it did include a lot of changes you need to plan for. Most measures will start in 2023 but have varying end dates, so you should review the timing of your planned activity carefully to ensure it’s still the most efficient.

Talk to our experts here at AccNet by calling +44 2070973767 if you need help unpacking these details, or need a hand adjusting to the times ahead.



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