In a time of economic recalibration, Chancellor Jeremy Hunt’s Autumn Budget 2023, has brought a mix of relief and reform for UK businesses and taxpayers. Among the key changes are a notable cut in National Insurance contributions and a significant increase in the National Living Wage, signalling a shift towards supporting both workers and businesses in these challenging times.
As always, we aim to provide a clear and concise summary of these changes, focusing on their impact on businesses and tax implications…
National Insurance and Tax Adjustments
National Insurance Cut
Employee National Insurance contributions have been reduced from 12% to 10%, effective from January 6, 2024. This change is expected to benefit around 28 million people, saving an average of £450 per year for someone on the median salary.
Self-Employed National Insurance Reforms
Class 2 National Insurance for the self-employed has been abolished, saving an average of £192 per year. Additionally, Class 4 National Insurance will be reduced from 9% to 8% on earnings between £12,570 and £50,270, saving around 2 million people an average of £350 per year.
Permanent Tax Break for Businesses
The Chancellor has made permanent a tax break allowing businesses to save on corporation tax through investment, aiming to encourage business growth and capital investment.
Wage Adjustments
Minimum Wage Increase
The National Living Wage will increase to £11.44 per hour from April 2024, a 9.8% rise. This rate now applies to individuals over 21 years.
Business-Focused Investments and Reforms
Investment in Strategic Manufacturing and AI
The budget allocates an additional £4.5 billion for strategic manufacturing sectors like aerospace and life sciences between 2025 and 2030. Furthermore, £500 million will be invested over the next two years to fund innovation centres for artificial intelligence development.
Research and Development Tax Relief
A new, simplified tax relief scheme for research and development merges existing schemes, with a reduced tax rate for loss-making companies from 25% to 19%.
Full Expensing for Businesses
The so-called “full expensing” scheme, allowing businesses to offset investment in items such as new IT equipment and factory machinery against tax, has been made permanent.
Business Rates Discount
The 75% reduction in business rates, a tax levied on commercial properties, will be extended for an additional year for businesses in the retail, hospitality, and leisure sectors, with a cap of £110,000.
Stay tuned for these valuable resources designed to keep you informed and prepared.
In the coming days, we will be publishing a comprehensive guide to the Autumn Budget 2023, offering an in-depth analysis of its implications and how they may affect you and your business. This guide will include finer details of the budget, providing clarity and insight into the changes and what they mean for the broader economic landscape.
We also invite you to join our free live webinar on 23rd November at 1pm, where our experts will be available to answer your questions about the budget and discuss its broader impacts. This is an excellent opportunity to gain a deeper understanding and to address any specific concerns or queries you may have regarding the latest fiscal policies.
