The government’s latest Autumn budget focussed more on spending than tax cuts.
This was not surprising given previous tax rises which have already squeezed many small businesses.
But what does it mean for your business?
The government said it will freeze the business rates multiplier for a further year.
This means a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors in England.
The Chancellor capped the discount at £110,000 per business. So, it will only benefit smaller businesses. This has been welcomed by businesses affected the most by the pandemic, such as those in the hospitality industry.
Annual Investment Allowance
There will be an extension of the temporary £1 million level of the Annual Investment Allowance to March 2023.
This will provide more upfront support to help businesses across the UK to invest and grow.
Vishal Chopra, KPMG Private Enterprise Tax partner, said: “Firms looking at capital expenditure will enjoy enhanced tax relief as the Annual Investment Allowance is extended at its current annual rate of £1 million through to March 2023, to coincide with the end of the super deduction tax relief announced by the Chancellor earlier this year. Further details are also to be released on a reform to the UK’s R&D tax credit regime which is expected to see the scope extended to include cloud computing and data costs, however a narrowing of the relief as it is refocused on innovation in the UK.”
Rachel McEleney, associate tax director at Deloitte, explained the changes to personal tax. She said:
“Taxpayers without dividend income will generally not see a change in their income tax liabilities from this tax year to next, based on the Chancellor’s announcement today. However, many have effectively missed out on a tax cut. Without the freezes announced in March 2021, the personal allowance and basic rate band would have increased by £390 and £1,200, respectively. This would have resulted in reductions to income tax of up to £78 for basic rate taxpayers, £396 for most higher rate taxpayers and £240 for additional rate taxpayers.
“Similarly, the freezing of the pensions lifetime allowance at £1,073,100 could be costing some taxpayers up to £21,395 in additional lifetime allowance charges if they take their benefits in 2022/23.
“Although the increase in the lower NIC thresholds would normally give rise to a saving, most taxpayers will be subject to higher NIC in 2022/23 due to the increase in rates by 1.25% as part of the funding for health and social care. Only those with earnings below £12,875 and/or trading profits below £11,710 will see a reduction in NIC.
“The combination of the freezing of the personal allowance and higher rate threshold together with the increase in NIC rates may have a significant effect for some taxpayers. For example, an employee who is below state pension age who earns £50,000 should expect to pay income tax and NIC totalling £12,802 in 2022/23. In the absence of the changes, the total liability would have only been £12,222 (£580 lower). “
Recovery Loan Scheme
The government is extending the Recovery Loan Scheme (RLS) until 30 June 2022.
From 1 January 2022, the following changes will come into force:
- The scheme will only be open to small and medium-sized enterprises
- The largest amount of finance available will be £2 million per business
- The guarantee the government provides to lenders will reduce to 70%
Catherine Lewis La Torre, Chief Executive at the British Business Bank, said: “A six-month extension to the Recovery Loan Scheme will also provide valuable support for smaller businesses as they look beyond the pandemic towards the opportunities available to them in the recovery.”
V4B Business Finance is an accredited provider of the scheme.
When you apply for the RLS we assess your situation. The main aim of the scheme is to improve the terms on offer to businesses.
If we can offer you a business loan for the same amount on better terms, without requiring the guarantee provided by the scheme, we will.
V4B Business Finance
Contact us to apply for the RLS. We can also provide free advice on the scheme or alternative funding for your business.
Call 01978 668939