UHY Ross Brooke Chartered Accountants

Kwasi’s mini-budget for business

tax accountant

by Phil Kinzett-Evans

The Government’s mini-Budget has come under a great deal of criticism, but there were things that businesses can utilise to strengthen their growth position and invest in their human capital:

Existing businesses

  • The well noted removal of the increase to Corporation Tax means that companies who budgeted for the increase to 25% from 19% now no longer have to consider that increase on top of general inflation, potentially freeing up resources;
  • The annual investment allowance, for purchases of plant and machinery, and qualifying integral features has been fixed at 100% indefinitely. This was due to be retracted. This can be hugely beneficial to business spending on capital purchases such as vans and heavy plant, IT equipment and some parts of office/business premises refurbishment. This should aid business growth and employment potential both for the Buyer and through the supply chain.

New businesses

  • For qualifying start-up companies, the increased availability of funds through tax efficient investment will be a welcome announcement. Companies can currently raise up to £150,000 of SEIS investment. As announced, the amount that companies may be able to raise under SEIS will be increased by two-thirds to £250,000. This will give start-ups cash earlier to employ key people to move their business forwards.
  • There is also an annual limit on how much an individual can invest in SEIS shares, which has been doubled to £200,000, giving up to £100,000 per annum of SEIS income tax relief.
  • Currently, only companies with gross assets below £200,000 at the date of investment can raise funds under SEIS. Under the new measures, this limit will be increased to £350,000. 
  • Another qualifying rule for SEIS is that companies must not have been trading for more than two years: this period will be increased to three years.

All businesses

  • Employers NIC was increased as a result of the health and social care levy. This will now not take place and so the rate will remain at 13.8% for NICs. In respect of Class 1A (benefits-in-kind) and Class 1B (PAYE Settlement Agreements) the NIC rate for Directors for 2022/23 will be changed to 14.53% for one year only to account for the change taking place from November 2022. Again, if the increase was budgeted for previously, the extra funds should be made available to increase staffing levels where needed, or to pay and retain existing staff.
  • From April 2023, the repeal of the Off-Payroll Working rules is probably more of a relief for larger businesses than small and the responsibility for the IR35 burden now shifts back to its 2017 position and lies with the contractor. However, there may be a silver lining insofar as some larger businesses were adopting a blanket approach to applying these rules, withholding tax at source on payments unnecessarily. That process will now not take place and the contractor will decide, with the help of their accountant, whether their contracts should be subject to payroll or not.

Business energy costs support

The government has confirmed that support on business energy costs will apply from 1 October 2022.

The Energy Bill Relief Scheme will provide support for all non-domestic energy users for energy supply contracts entered into after 1 April 2022. The scheme will effectively guarantee that qualifying non-domestic consumers pay no more than £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas – a significant discount on the current wholesale price. Discounts will be applied to bills automatically by suppliers so there is no need for a business to apply for support.

The support scheme will operate until 31 March 2023 and the government will review the scheme early in 2023 to assess whether it will need to be continued for businesses in certain sectors, for example, hospitality businesses. Whilst this doesn’t give businesses more cash, it does perhaps allay some concerns about the potential for cost increases to destroy planned budgets for spending and growth.

Next steps

If you’d like to know more about any of the above in the context of your new or existing business, please do not hesitate to contact us.

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