Businesses have not had an easy time in 2022, experiencing everything from supply chain disruption, energy price hikes, general inflation, and mass employee resignations. Today, 77% of SME leaders are concerned about the cost of living crisis. Add to that an almost-certain official recession this year, and the future doesn’t look good.
With this in mind, many businesses will be looking to Chancellor of the Exchequer Rishi Sunak’s Autumn Budget with hope. Surely the government will do something to help small businesses with the dire financial outlook?
Already, the rumour mill is churning with policies that will supposedly be unveiled in the Autumn Budget, including business tax cuts. To help you prepare your business for any changes, let’s look at precisely what’s going on.
What Changes Are Already in the Works?
When Rishi Sunak unveiled his mini-budget in March 2022, UK businesses were already well aware of the effects of inflation. That month, the inflation rate hit a record-breaking 7% and has since risen to 9%.
To help businesses, Sunak announced an increase of £1,000 in the Employment Allowance for small businesses. Elsewhere in the budget, Sunak also introduced financial savings on green technology, which will help companies save £35 million.
However, businesses should also be aware of pre-existing policies that will come into effect soon. For example, late last year, Sunak announced a rise in corporation tax– from 19% to 25%–that will go into effect in April 2023.
The British Chamber of Commerce predicts that inflation will hit 10% in Q4. As such, the contents of Sunak’s Autumn Budget will be more critical than ever before.
The Autumn Budget: What Can We Expect?
Looking ahead to the Autumn Budget, some beneficial policies could be on the horizon. At a meeting of the Confederation of British Industry (CBI) last month, Sunak promised that there would be further tax cuts for businesses in the upcoming budget.
In particular, Sunak will be looking at alternatives to the super-deduction tax break, which expires in 2023. This tax break offered 130% relief on the purchase of business equipment. The government has already considered alternatives, including increasing the annual investment allowance for businesses.
What is clear, though, is that the Chancellor is focused on investment, training, and innovation–so expect any policies to target those areas in particular.
Our Advice
If we’ve learned anything from the past two years, it’s virtually impossible to predict the future. There’s also no telling what further scandals could hit the UK government–Sunak is still bearing questions about his wife’s non-domicile tax status, which has seen her avoid millions in UK taxes from foreign income.
We do know that businesses will likely experience tax cuts later this year, though we’re still in the dark as to what those will look like. While we wait for the budget to be officially announced later this year, SMEs should spend time evaluating their finances to be as prepared as possible.
