The Autumn Statement for small businesses in 2023

A number of tax cuts for small businesses are announced by Chancellor Jeremy Hunt, including freezing business rates for retail, leisure, and hospitality, and extending the tax break for business investment.

In his Autumn Statement 2023, Chancellor Hunt announced some of the biggest tax cuts in British history for businesses.

Businesses will also benefit from a 75 percent discount on business rates for retail and hospitality businesses, as well as a permanent tax break for business investment.

As Jeremy Hunt said in the House of Commons, "small businesses work hard for us and the Conservative Party works hard for them.".

The Autumn Statement for small businesses in 2023

Chancellor Jeremy Hunt announced the following measures that will affect small businesses:

National Insurance

Hunt announced this week that he is cutting national insurance for more than 27 million people by 2 percent, which will save an average worker on a £35,000 salary more than £450 a year.

In an announcement, the chancellor said he would reduce national insurance rates for employees from 12 to 10 percent.

In the present system, employees who earn more than £12,570 pay 12 per cent national insurance on their earnings up to £50,200.

The compulsory class two national insurance contributions for the self-employed will be abolished, and the class four national insurance contribution on profits between £12,570 and £50,270 will be reduced to 8% from 9%.

Self-employed people in the UK will save £350 a year from April thanks to the cuts.

Business rates discount

It was announced that Hunt would extend the 75 percent business rates discount for the retail, hospitality, and leisure sectors by another year.

Despite making a penny of profit, the biggest frustration for small businesses is the tax they have to pay - not least business rates. As a result of Small Business Rates Relief, a third of properties have already been freed of rates. A total of £14.5bn has been spent on freezing the tax rate over the past three years. In Transitional Relief, we have removed downward caps.

“And for retail, hospitality and leisure businesses we have introduced a one year 75 per cent discount on business rates up to £110,000. These measures have saved the average independent shop over £20,000. It is not possible to continue with temporary support measures forever. But whilst the standard multiplier, which applies to high-value properties, will rise in line with inflation, I have today decided that we will freeze the small business multiplier for a further year.

“And following extensive discussions with the FSB and many colleagues in the House, I have also decided to extend the 75 per cent business rates discount for retail, hospitality and leisure businesses for another year too.”

Full expensing

This extension of "full expensing" allows companies to claim back up to 25p for every pound invested, which had been due to end in March 2026. An estimated £10 billion will be spent annually by the Treasury as a result of the move. He said it would give Britain “one of the most generous tax reliefs anywhere in the world”.

Rather than spreading out the cost of investments in IT and machinery across multiple tax years, full expensing rewards firms for investing in their businesses.

What the Chancellor didn't mention...

Tax-free personal allowance

The idea of raising the tax threshold for employees from £12,500 was one of the options under consideration. Tax-free personal allowances have been frozen for six years, resulting in millions paying tax for the first time. Raising the minimum tax threshold from £11,850 to £12,500 in 2018 was seen as an incredibly positive thing to do for small businesses and their often low-paid staff.

EIS and VAT

There will be an extension to the sunset clauses on EIS and Venture Capital Trust (VCT) schemes beyond 2025.

There was a promise from the government that details would be provided beyond 2025 at a future fiscal event - and this could be it.

R&D

Research and Development (R&D) schemes for small and large businesses could be merged into one. Due to a number of "rogue claims" made on behalf of businesses by advisers, R&D tax credits have come under scrutiny.