The Chancellor’s latest plans for the UK economy have impacts for SMEs, according to business comparison experts Bionic. Content manager Les Roberts, has broken down the main points outlined in the Spring Budget including energy bills, business rates, taxes, VAT, fuel duty and National Insurance:
Energy Bill Support: “Although Jeremy Hunt has announced a U-turn on the 20% increase to consumer energy bills, the scaling back of business energy bill support is set to continue.
The Energy Bills Discount Scheme (EDBS) will replace the Energy Bill Relief Scheme (EBRS) from April 1. This will discount the unit rates on all eligible non-domestic gas and electricity contracts for the next 12 months.
Funding for the EBDS will be capped at £5.5 million which is a significant cut from the £18 billion put aside for the 6 months of the EBRS.
The climate change agreement scheme will be extended until March 2025 to give eligible businesses tax relief for energy efficiency measures.
Business Rates : “Business rates will be reevaluated on April 1 and will be based on the Valuation Office Agency’s estimate of your property’s open market rental value on April 1, 2021.
From April 6, the 2023/24 Retail, Hospitality and Leisure business rates relief scheme will give eligible properties a 75% relief on business rates, up to a cash limit of £110,000 per business. Who does this include? Eligible businesses include shops, restaurants, cafes, drinking establishments, cinemas, live music venues and more.
Corporation Tax: “The main rate of corporation tax will increase from 19% to 25% from April 6. This higher rate will be paid by limited companies on profits over £250,000.
If your company has profits of £50,000 or less, you’ll pay a small profits rate of 19%.
Any profits between £50,000 and £250,000 will be eligible for marginal relief. This means there will be a gradual increase between the small profits rate and the main rate, so you’re not hit with the full 25% rate.
The ‘super-deduction’ will end on March 31 and will be replaced with full capital expensing for the next three years. This means that every £1 a company invests in IT, plant or machinery can be deducted in full from taxable profits.
VAT: “The Chancellor announced there would be a two-year extension to the threshold at which businesses must start paying VAT. This will now be held at £85,000 of turnover until 2026.”
Dividend Tax: “Your income tax band dictates the rate of tax you pay on dividends above the allowance. From April 6, this allowance will be cut from £2,000 to £1,000. It will then be cut to £500 from April 2024.”
Capital Gains Tax: “From 6 April 2023, the capital gains tax-free annual allowance will be cut from £12,300 to £6,000, then to £3,000 from April 2024.”
Fuel Duty: “From 6 April 2023, the capital gains tax-free annual allowance will be cut from £12,300 to £6,000, then to £3,000 from April 2024.”
National Insurance: “As outlined in the 2022 Autumn Statement, National Insurance thresholds will stay the same until 2028.”
In the wake of cuts to business energy bills, Les has provided some additional advice on how businesses can cut their costs:
“I recommend comparing business energy quotes to see if you could save money by fixing your rates. In fact, switching all business essentials is a good way to cut costs. Business essentials, like energy, insurance and connectivity are critical to keeping your business running. If you want to future-proof your business, experts can compare deals on business gas, electricity, insurance, broadband and more to secure the best deals.”
For a detailed breakdown of the budget in more detail, including up to date income tax rates, extra support available for businesses, and a video explaining the Energy Bill Discount Scheme, visit: https://bionic.co.uk/blog/how-will-spring-budget-impact-your-business/?r=enbi