The FSB (Federation of Small Businesses) has called the Autumn Statement ‘a missed opportunity to promote growth and prosperity’ for small firms. Chris Martin McTague, FSB’s National Chair stated ‘high on stealth-creation and low on wealth-creation, piling more pressure on the UK’s 5.5 million small businesses, their employees and customers.’
Key points from the Autumn Statement:
- VAT registration threshold frozen
The VAT threshold has been frozen at £85,000 until 2026, which is the turnover at which businesses need to register to pay the tax. This is essentially a ‘stealth tax’.
2. Personal allowance freeze extended
The current income tax personal allowance is £12,570, which Rishi Sunak froze until 2026. The government have now extended this until 2028. This is another ‘stealth tax’. The more people earn over the years the more tax they will pay.
3. Reduction in the additional income tax rate threshold
The income tax threshold is being reduced from £150,000 to £125,140. More self-employed people could potentially become additional higher rate tax payers, paying 45 percent on earnings above £125,140.
It is estimated that 250,000 more people will be brought into the additional rate following the change.
4. Other allowances made less generous
Jeremy Hunt has slashed allowances for many businesses. If you run a limited company and pay yourself in dividends the allowance will be cut from £2,000 to £1,000 in 2023-2024, then to £500 in 2024-2025.
Business owners who may need to pay capital gains tax, for instance when they sell business assets like machinery, will have the tax allowance cut from £12,300 to £6,000 in 2023-2024, then to £3,000 in 2024 – 2025.
5. Business rates
From 1 April 2023, business rate bills will be updated to reflect changes in property values since the last revaluation in 2017.
To support this transition, the government has announced a targeted support package worth £13.6 billion over five years.
For further information on business rates read the governments Business Rates Factsheet.
6. Energy bills
The government will be introducing more targeted approach to support for businesses. This is to protect those that are struggling the most. The energy relief scheme will remain in place until March 31st 2023, then the more targeted support will start from April 2023.
7. National living wage
If you have employees the government has announced that the national living wage will increase to £10.42. This will give over two million people a pay rise.
8. National Insurance freeze
Businesses have to pay 13.8 per cent in National Insurance contributions on earnings of all workers over £9,100 per year. The Government has frozen this threshold until 2027-28, which will raise £5.8bn by 2028. This means that businesses will be paying more over the coming years for each person they employ.
The full Autumn Statement 2022 is available to read here.