Autumn Budget: Predictions for small businesses

With the UK still working towards recovery, the Autumn Budget and Spending Review on 27 October is a chance for the Government to look at where to spend and invest and also where to plug its financial gaps. But what could this mean for small businesses? Here are seven key areas to keep an eye on.

A technical Budget that makes tweaks to raise revenue

A number of tweaks that amount to ‘stealth’ tax changes are being predicted.

One of these has already been announced. The reform to basis periods for sole traders and partnerships is set for April 2024, meaning that business profits will be calculated for the tax year rather than the accounting year. Whilst this is being branded as a simplification, it is sure to accelerate revenue for the Exchequer for 2023 and the next five years.

Many are also predicting changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) following recent ‘simplification’ reviews by the Office of Tax Simplification (OTS).

The outcome of the Spending Review

The Chancellor will announce the outcome of the Spending Review that will set UK Government departments resource and capital budgets for 2022-23 to 2024-25.

Expect to hear how the Government will, over the next three years:

  • Invest in public services across the NHS, education, the criminal justice system and housing
  • Spread opportunity across the UK by improving certain areas, working with local leaders and strengthening the private sector
  • Lead the transition to net zero across the country and globally
  • Advance “Global Britain” and seize the opportunities of EU exit
  • Develop plans for an infrastructure and innovation revolution and cement the UK as a scientific superpower

Will fuel duty stay frozen?

In March 2021, the Government announced that fuel duty would be frozen at 57.95p for the eleventh consecutive year.

However it is being reported that Boris Johnson has refused to rule out a fuel duty rise as part of the upcoming Budget.

It is thought that if the Government doesn’t specifically announce that they are maintaining the freeze, fuel duty will indeed rise.

More on the Plan for Jobs extension

The Chancellor has already announced a £500m Plan for Jobs extension to help people back into work.

For small businesses, please note that the Kickstart Scheme will now last until March 2022, with applications closing 17 December 2021. This scheme allows businesses to hire young people aged 16-24 and on Universal Credit for six-month work placements, funded by the Government.

The Government has also extended the £3,000 incentive for every apprentice hired until 31 January 2022.

The Spending Review on 27 October will confirm specific funding for each measure.

Will calls to keep VAT low be listened to?

The temporary reduction to hospitality and tourism VAT ended on 1 October, when it increased from 5% to 12.5%. It is due to return to pre-pandemic 20% in April 2022.

However the industry is pushing for the Government to keep VAT at 12.5% to aid continued recovery.

Trade bodies UK Hospitality, the British Beer and Pub Association, the British Institute of Innkeeping, Tourism Alliance and the Association of Leading Visitor Attractions have warned that rising VAT risks derailing recovery at a time when businesses are still in survival mode.

What is happening with Capital Gains Tax?

In 2020, the Office of Tax Simplification (OTS) recommended that the Government should bring Capital Gains Tax in line with Income Tax.

CGT is a tax on the profit of an item sold that’s increased in value. It is the gain that’s taxed, rather than the amount of money received.

The OTS recommendations, if implemented, would see the tax rate on capital gains rise to 20% for basic rate taxpayers. The rate for higher rate taxpayers would rise to 40%.

In the March 2021 Budget, the Government froze the threshold at which you start paying CGT at £12,570 until 2026. Keep an eye out for any further changes to the tax on 27 October.

More details on Help to Grow: Digital

Back in March, the Government announced that the Help to Grow scheme for businesses with employees. The scheme aims to help businesses learn new skills, reach more customers and boost profits.

Help to Grow: Management – which aims to help businesses develop strategic skills – has already launched.

The second part – Help to Grow: Digital – will launch this Autumn. This is free advice on how technology can help a business, with a discount of up to 50% on the costs of approved software, worth up to £5,000.

To be eligible a business must have between five and 249 employees, be registered at Companies House and have been trading for twelve months.

The Government says that full details on eligible businesses and software will be revealed this Autumn, which opens the door for further information to be given on 27 October.

How we will be covering the Autumn Budget

We will be keeping you informed of all the key announcements on our website and social media channels, so keep an eye out for updates from 27 October onwards.

How can we help?

If you need assistance or advice related to any of the measures announced as part of the Autumn Budget and Spending Review, please contact us to arrange an initial discussion.

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