Thursday 17th November saw the Chancellor of the Exchequer deliver the long awaited full fiscal statement. Our team take a look at the measures delivered, and how they’ll affect your business.
The main headlines saw a freeze in the VAT registration threshold, changes to the capital gains tax which will affect small businesses and landlords when they sell assets such as land or machinery and the resumption of revaluing business rates.
“With the VAT threshold being frozen at £85,000 until 2026, all small businesses who don’t currently pay VAT need to keep a close eye on this” says Adam Drawwater, Commercial Director for Moorgate Finance. “With rising prices small businesses will earn more, so they’ll have to register to pay VAT if they break the threshold. It’s important to note that the threshold doesn’t rise in line with inflation, so as manufacturers sell for a higher cost it’s something to bear in mind for future plans.”
Another big change was the news that business rates will be updated 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 – but this remains big news for small business owners. The announcements were:
- multipliers will be frozen from 2023-24 which the Treasury says will be a “tax cut worth £9.3 billion over the next five years”
- a transitional relief scheme will cap bill increases caused by changes in rateable values at the 2023 revaluation (bill increases for the smallest properties will be capped at five per cent, while increases for medium-sized and larger properties will be capped at 15 per cent and 30 per cent respectively)
- retail, hospitality, and leisure business rates relief will be increased from 50 per cent to 75 per cent (up to £110,000 per business) in 2023-24
- if businesses lose their eligibility for small business rates relief as a result of revaluation, bill increases will be capped at £600 per year from April 2023
“The news that business rates relief for those in the retail, hospitality and leisure business is welcome news” says George Churcher, Senior Account Manager. “Many small businesses rely on these reliefs to help with the costs of running their business, and giving them certainty over the next year will mean they can look at their cash flow needs with more conviction. Many businesses have struggled with reduced consumer demand as they recover from the pandemic, but ongoing support means they can invest in equipment and stock to aid their growth.”
The Chancellor also confirmed that the mainstream UK corporation tax rate will move to 25% from 1 April 2023 on profits above £250,000. Previously, announcements confirmed that the annual investment allowance which provides 100% tax relief on the first £1m of qualifying expenditure, will continue permanently post March 2023. For those businesses spending less than £1m they will still achieve immediate tax relief in year of expenditure. However, for those companies with high capital expenditure, many of which are achieving an unlimited 130% ‘super-deduction’ for expenditure incurred by 31 March 2023, tax relief is being spread over a far longer period from April 2023 onwards.
“The Annual Investment Allowance (AIA) being moved to £1,000,000 on a permanent basis is great news for businesses who look to invest in new equipment, plant and machinery” says Natalie Brighten, Senior Account Manager. “Schemes such as the AIA and the ‘Super-Deduction’ really help businesses invest, and as they can take advantage whilst using a Hire Purchase deal, it means they get all the benefits of renewing equipment, tax reliefs and keeping their cash in the bank. Let’s say an eligible business invests £100,000 in qualifying equipment – When you come to calculate your taxable profits, your corporate tax deduction will be £130,000, which is 130% of your initial investment. Deducting £130,000 from your taxable profits will reduce your tax liability by up to 19% of that – which is £24,700. That’s a lot of money to save by investing and the super-deduction includes all new plant and machinery, and can include computer equipment and servers, tractor units, lorries, vans, ladders, drills, cranes, office chairs and desks, electric vehicle charge points, refrigeration units and compressors.”
Moorgate Finance remain committed to helping businesses achieve their aims and provide a range of financial solutions to help them invest and grow, and the important of customer service has never been more important. Our expert team of Account Managers can help evaluate your options – call us today on 01908 926262 to find out more.