On 22nd November, Chancellor Jeremy Hunt made his Autumn Statement to Parliament – and despite the challenges of the past three years there were positives in it for businesses in our county.
Here’s our overview of what you need to know, the changes and the continuities you should expect, how you will benefit from them, and other developments you need to be aware of.
We spoke - and the Government listened
First of all, the Statement shows that, here at Bedfordshire Chamber, we have a real influence on the Government’s policies on businesses and the communities they serve, through our membership of the British Chambers of Commerce (BCC).
Listening to members across the country and understanding their challenges, we worked with our wider Chamber network and the BCC to raise numerous issues with the Chancellor and Government. We are pleased that our calls to help businesses deal with the current economic climate have been listened to, with full expensing, improved access to the electricity grid, and planning reform being secured.
Better access to beefier power
The Government has now committed to cut grid access delays by 90%, and has lifted the windfall tax for new renewable projects. These measures will speed up delivery of homegrown, renewable energy, substantially increase the grid’s capacity, and boost energy security for both homes and businesses. As Shevaun Haviland, Director General of the BCC, explains “Businesses need cheap energy to be competitive, and they can’t get that energy without our grid being able to carry it to them.”
Cracking the whip on planning
Shevaun Hailand commented: “It is vital that more resources are provided to planning departments, processes are streamlined, and the system incentivises, rather than disincentivises, economic growth” and, in terms of planning reforms, the Government has infrastructure and large projects firmly in its sights. It will bring forward plans for authorities to offer guaranteed accelerated decision dates for major developments in England, and has committed to return the Nationally Significant Infrastructure Project regime to the two-and-a-half-year average consenting time achieved in 2012.
Self-employed? You'll probably pay less
If you’re a sole trader, or otherwise self-employed, you’ll benefit from a cut to the main rate of Class 4 self-employed National Insurance Contributions (NICs) from 9% to 8% from 6 April 2024. This is worth about £350 for a person on average self-employed earnings.
It has also been announced that no one will be required to pay Class 2 self-employed NICs from 6 April 2024.
The reductions are profit-dependent, but in all cases access to contributory benefits (state pension, for example) is preserved and, in some instances, improved.
More detail is available on the Government’s National Insurance Factsheet here.
Capital Allowances: full expenses now permanent
The cost of buying plan, machinery, and even office equipment like desks, effectively came down in the Statement, as the Chancellor announced that “full-expense” Capital Allowances (as mentioned above) would now not be discontinued in March 2026, and would instead continue indefinitely.
This means you can continue to claim a 100% first-year allowance for main rate expenditure, and a 50% first-year allowance for special rate expenditure, reducing your tax liability correspondingly.
Why is this important? The BCC explains: "The decision to make full expensing permanent will be a boost to companies wanting to invest. Our research shows that 34% of businesses have already benefited from the policy, rising to 47% for manufacturers.”
R&D gets a boost (but read the small print!)
For businesses with a significant Research and Development (R&D) function, tax relief enhancements have also now come into force.
These include providing a higher rate of payable tax credit for eligible SMEs. Loss-making companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if eligible.
In reality, this is not a simple topic; much turns on the definition of what is and isn’t an “R&D-intensive” company, and also on accounting timings, so it’s worth checking out the detail.
Higher costs but a happier workforce?
The cost of living crisis has clearly spurred the Chancellor into action, as he has both reduced employees’ National Insurance contributions, and increased their statutory minimum wages.
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. The earnings of young people and apprentices on the National Minimum Wage will also increase to £6.40 an hour.
Clearly, wage rises mean higher costs for many businesses, but the prospect of better earnings may help you to hold on to vital talent in a highly competitive market.
What do you need to do now
You’ll need to consult with your payroll company or payroll software provider, and where applicable your IT service provider, to get ready to implement the change to Class 1 employee NICs that comes into effect from 6 April 2024.
If you have apprentices or workers eligible for National Living Wage or National Minimum wage on your staff, you’ll have to update their pay too.
For more detailed information on all the measures announced, take a look at Autumn Statement 2023 - and don’t forget, at Bedfordshire Chamber we can connect you to the experts, tools, and resources to help you make the most of what the Chancellor is offering.
For more information and advice, please visit www.chamber-business.com, or call our friendly team on 01582 522448.