top of page
  • Writer's pictureThe Place Support Team

2023 Spring Budget: How will it affect your business?


The Chancellor of the Exchequer has announced the latest UK budget, and it's one that aims to tackle the country's productivity issues head-on. With lower business investment and higher economic inactivity than similar countries, the Chancellor describes it as a "Budget for growth."


During his speech, the Chancellor focused on the four pillars of his industrial strategy, which include enterprise, employment, education, and growth across the UK. These pillars form the foundation of the budget, with the aim of supporting businesses, encouraging more people to work, providing people with the skills they need, and fostering growth across the UK.

While the headlines have been dominated by the expansion of free childcare, the scrapping of the lifetime allowance on tax-free pension contributions, and the extension of energy bills support for households, there are several other announcements that will affect small businesses.


Here are some of the key topics mentioned in the budget last week:


Annual Investment Allowance

The UK government has increased the Annual Investment Allowance for smaller businesses to £1m. This increase will enable small businesses to deduct the full value of their investment from their taxable profits.


Corporation Tax

Starting from April, the UK government is set to raise the corporation tax rate from its current rate of 19% to 25%. This announcement was first made by Chancellor Rishi Sunak in the 2021 Spring Budget.


The increased tax rate will mainly impact businesses that earn profits of more than £250,000. Companies that make profits between £50,000 and £250,000 will receive some relief, while small businesses that earn less than £50,000 in profits will not be affected by the tax rate increase.


R&D Tax Credits

In Spring Budget 2023, the Chancellor announced a new R&D scheme aimed at supporting 20,000 SMEs in the UK. This scheme, which will be introduced on April 1, 2023, will be worth around £500 million per year and will focus on supporting loss-making R&D intensive SMEs.


The aim is to provide targeted support to those businesses most affected by the rate changes introduced in the Autumn Statement of 2022.


The scheme will support around 1,000 claiming companies in the pharmaceutical and life sciences industry, 4,000 digital SMEs, and 3,000 other manufacturing and professional, scientific, and technical activities firms.


The focus on supporting the development of AI, machine learning, and other digital-based technologies is expected to be beneficial to the UK's economy.


Tax on Draught Beer frozen

The UK government has announced a freeze on the tax on draught beer, providing a boost for hospitality businesses. This move will result in up to an 11p reduction in the duty on average-strength draft beer, bringing it in line with the relief offered to supermarkets. The new tax rate will take effect from 1 August.


Conclusion

Although recent measures from the 2023 Spring Budget have brought some relief, there is still concern that small businesses may not have fully recovered from the challenges they faced. As SMEs make up over 99 per cent of all UK businesses and 48 per cent of employment, it is crucial for the government to remain attentive to their needs and provide effective policies to support their livelihoods for the recovery and growth of the economy.






18 views0 comments

Comments


bottom of page