As you may be aware the Chancellor announced the Autumn Statement 2023 on Wednesday 22 November 2023.
The Autumn Budget 2023 included a number of changes however a lot of the information was repeated from the key announcements in the Spring Budget earlier in the year that were due to take effect until next year.
Capital Allowances ‘Full expensing’ deduction
The new ‘Full Expensing’ deduction announced from 1 April 2023 and originally intended to last until 31 March 2026 will be made permanent. The relief allows companies to claim 100% first-year deduction from profit before tax (50% for special pool rate) on qualifying new main-rate plant and machinery investments.
Annual Investment Allowances
Annual Investment Allowance was previously confirmed at a permanent rate of £1m from April 2023. Of course, this isn’t a great benefit to a lot of small business owners who can’t afford to invest this much into their businesses.
Expanding the Cash Basis
Following a consultation at Spring Budget 2023, the government is expanding and simplifying the income tax cash basis for the self-employed and partnerships. These changes will take effect from 6 April 2024, for 2024-25 and will be included in the Autumn Finance Bill 2023.
Small business rates (SBR) relief 75% discount will be extended for a year (2024-25) for the retail, hospitality and leisure sector. In addition, the SBR multiplier will also be frozen for a year.
Government grants to install electric vehicle charge points
Businesses can potentially claim 100% of the costs of installing an electric vehicle charging point as a capital allowance. As previously announced, the 100% First Year Allowance for electric vehicle charge points was extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
As previously announced, Personal tax thresholds – ie personal allowance, basic and higher-rate thresholds for income tax have been frozen until April 2028 at the current level of £12,570 and £50,270. The additional rate threshold was reduced from £150,000 to £125,140 from 6 April 2023.
Personal allowance for higher rates from 2023/24
Where annual income exceeds £100,000, personal allowance is lost at a rate of £1 for every £2 of income above £100,000. This is the threshold where the entire personal allowance is lost.
The loss of the personal allowance means a person is taxed at 40% on the additional £2 of income, and they also pay an extra 40% on the £1 of personal allowance lost. This results in a marginal rate of 60%, which continues up to £125,140 (£100,000 + (£12,570 x 2)). At the £125,140 point the entire personal allowance is lost.
National insurance changes!
This is the most notable section.
The national insurance thresholds for all classes were previously announced to be frozen until April 2028 at the current levels.
The employment allowance continues at the current level of £5,000.
The government is extending the NICs relief for employers of eligible veterans for one year. The relief means businesses pay no employer NICs on annual earnings up to £50,270 for the first year of a qualifying veteran’s employment in a civilian role.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will be abolished from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate.
The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
Class 1 contributions for employees will be reduced from 12% to 10% from 6 January 2024.
Capital gains tax: reduced annual exemption
As previously announced, the annual exemption amount for capital gains tax for individuals reduced from £12,300 to £6,000 from April 2023. This will reduce further down to £3,000 from April 2024.
National Minimum Wage Increases
From 1 April 2024, the National Minimum Wage is increased as follows;
Apprentices and 16-17 to £6.40/hour
18 – 20 to £8.60/hour
21 & over to £11.44/hour.
This is not an extensive list of the full budget, just the main changes that impact small businesses and individuals.
As you can see there is unfortunately not a lot to benefit small businesses. The wage bill for small businesses is likely to increase and some may benefit from the reduced national insurance but this is only for sole traders.
If you want to know more then please do get in touch.
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