On 22nd November, Mr Hunt unveiled a series of measures to boost the economy and help businesses.
The main announcements that affect the majority of us include:
- National Insurance to be cut from 12% to 10% from 6th January 2024. Mr Hunt said that: “This change will help 27 million people. It means someone on the average salary of £35,000 will save over £450,”In a boost to self-employed people, the chancellor promised to abolish Class 2 National Insurance, equating to a saving of nearly £192 / year.
Class 4 National Insurance contributions charged on all profits between £12,570 and £50,270 will be cut from 9% to 8%.
- National Living Wage for over-21s to increase from £10.42 to £11.44 an hour., making this worth up to £1,800 for a full-time worker.
- The 75% business rates discount has been extended for retail, hospitality and leisure businesses for another year, worth £4.3 billion. This will save the average independent pub over £12,800 next year.Hunt added that he will freeze the small business multiplier for a further year.
- The State pension will go up to £221.20/week from April 2024, a rise of 8.5% from April 2024, and worth up to £900/year.
- A tax break allowing companies to reduce their tax by up to 25p for every £1 they spend on plant and machinery has been made permanent, the Chancellor said. The deduction had been due to end in April 2026. Hunt told parliament that the move will increase annual investment by around £3 billion a year and said it was “the biggest ever boost for business investment in modern times”.The Chancellor has confirmed the threshold for businesses to be considered R&D intensive will be reduced from 40% to 30% of total expenditure.
Hunt told parliament that he will launch a “new simplified R&D tax relief”, combining the existing R&D Expenditure Credit and SME schemes. He said he would also reduce the rate at which loss-making companies are taxed within the merged scheme from 25% to 19%.
- Benefits are to rise in line with inflation.
- Alcohol duty frozen until next year – never a bad thing to hear, especially with the Christmas season approaching.
- NatWest: the government owns a 38.7% stake this bank and subject to how the share market was doing, Mr Hunt announced that they would be exploring options to sell these shares over the next 12 months. This move was being considered as part of “further capital market reforms to boost the attractiveness of our markets”, and make the UK one of the most “attractive places to start, grow and list a company”.
The Negatives?
Many SMEs feel that the budget did very little for them other than to increase wages. Business owners lost out when the ability to take income as dividends was targeted. I believe at the time, the rationale for this was to create more parity between SME owners and PAYE employees.
However this left many of us directors as having no benefit for being an owner and taking on all the burden and associated risk of running the company etc. Imagine if this was applied to PLCs and dividends to shareholders and key directors was treated in the same vein?
There was no changes to VAT, corporation tax or any further help with energy bills, leaving quite a few of my contacts feeling a bit “meh”…
How do you feel that this budget has impacted you?
