SARAH WARD: AUTUMN STATEMENT REFLECTIONS

Key Highlights from the Autumn Budget 2023 for Members of the Giftware Association

In a budget announcement made yesterday, Chancellor of the Exchequer, Jeremy Hunt, unveiled a series of measures aimed at boosting the British economy. While these changes were initially expected to be minor adjustments, the budget contained some surprising and significant policy shifts, particularly relevant for members of The Giftware Association.

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Tax Changes:

??Class 4 National Insurance Reduction: A notable change is the reduction in Class 4 National Insurance (NI) for the self-employed, decreasing from 9% to 8%. Additionally, the Class 2 NI will be abolished. These measures are a reflection of the government's confidence, driven by their success in halving inflation, which has dropped from 11.1% to 4.6% and is on track to reach 2% by 2025. These changes are expected to ease the financial burden on self-employed individuals.

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?Capital Allowances: The government has decided to make 'full expensing' permanent, representing what is termed as "the biggest business tax cut in modern history." This means businesses can continue to deduct the entire cost of qualifying plant and machinery investments from their taxable profits.

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Other Significant Changes:

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? National Living Wage Increase: The National Living Wage will see an increase to ￡11.44 per hour, marking a substantial 9.8% rise. This could positively impact SMEs, particularly those in the retail and hospitality sectors.

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?National Insurance Reduction: The 12% rate of National Insurance will be reduced by 2 percentage points from January 6, 2024, down to 10%. This reduction translates to an additional ￡450 per year for an average salary of ￡35,000.

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? State Pension Increase: From April 2024, the State Pension will see an 8.5% increase, amounting to ￡221.20 per week. This could potentially benefit retirees and small businesses catering to an older demographic.

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??Universal Credit (UC) Increase: Starting from April, UC will see a 6.7% increase, resulting in an additional ￡470 per year for 5.5 million people. This boost could have a positive impact on consumer spending and small businesses.

? Housing Allowance: An increase in housing allowance is set to benefit 18 million households, potentially boosting the housing market and related industries.

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??Alcohol Duty Freeze: There will be no increase in alcohol duty on beer, cider, wine, and spirits. This is particularly good news for businesses in the hospitality sector.

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??R&D Tax Relief: The government will introduce a new simplified Research and Development tax relief, combining existing schemes. Loss-making companies will see a reduction in the tax rate from 25% to 19% in the new merged scheme. The threshold for additional R&D support for intensive loss-making SMEs will also be lowered to 30%.

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Legislation Changes:

??Late Payments Procurement Acts: Companies seeking government contracts must demonstrate that they pay their bills within 55 days, with a future target of reducing this to 30 days. This aims to support SMEs by ensuring they receive timely payments.

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??Planning Application Reform: Local councils will have the authority to recoup the entire expenses associated with significant commercial planning applications. This can expedite project approvals and potentially benefit businesses involved in construction and development.

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??Pension Reforms: Workers now have the legal right to demand that their employer pays their pension into an existing pension pot, reducing administrative complexities for both employers and employees.

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In conclusion, the Autumn Budget 2023 introduces several impactful changes and initiatives aimed at bolstering the UK economy. These measures, coupled with the government's confidence in economic stability, can have significant implications for SMEs, affecting tax liabilities, financial burdens, and investment opportunities. Our members should carefully assess these changes and consider how they might impact their business operations and financial planning.

Though I am still digesting all the information myself, and understanding the impact on our organisation, I would value your thoughts. Financial commentators are painting a rather gloomy outlook. Do you agree?

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Sarah