And crucially, what wasn’t?

Just as the last of the leaves begin to settle in the garden, so the initial excitement from the Chancellor’s Autumn statement has dissipated too.

Now we can look in more detail about what the main announcements are for businesses and how they will affect small and medium sized companies and their owners and directors all over the UK. 

Taxes up, allowances down

The main headlines highlighted that taxes would be rising for individuals across the board in an attempt to find an estimated £40 billion shortfall created by the last spending statement in September. 

But it’s always interesting in the analysis to look at what wasn’t mentioned as much as what was and in this case – there was no specific mention of the forthcoming rise in corporation tax that was previously announced by the last but one chancellor, one Rishi Sunak, now Prime Minister. 

The rise was abandoned by the previous administration before being reinstated again as part of a panicked response to the market sentiments that didn’t like the plans and direction of travel – not one bit. 

So it’s an interesting point in this regard that the current chancellor didn’t mention business taxation at all. 

This means that the corporation tax rate will move to 25% from April 1st 2023 on profits above £250,000 while the main rate for profits under this amount will remain at 19%. 

Additionally, there are changes to allowances available under Capital Gains Tax. 

The current allowance is £12,300 but this will be reduced by over 50% to £6,000 from April 2023 and then cut further to £3,000 from April 2024. 

This was followed up In a left/right combination with a reduction to the income tax dividend allowance too. Currently set at £2,000, this will fall to £1,000 in April 2023 and then £500 in April 2024. 

Research & Development tax credits

The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20% from April. 

An additional deduction for SMEs will decrease from 130% to 86% at the same time while the SME R&D credit rate will decrease from 14.5% to 10%.  The Chancellor said “This improves the competitiveness of the RDEC scheme and is a step towards a simplified, single RDEC-like scheme for all. 

While the government consults on the design of a single scheme, R&D tax reliefs will be reformed by expanding qualifying expenditure to include data and cloud costs, refocusing support towards innovation, targeting abuse and improving compliance. 

These changes will be legislated for in the Spring Finance Bill due to be published in early 2023. 

Revalued business rates – who are the winners and losers?

More than 500,000 retail properties across England and Wales have also been revalued with new rateable values which will be used to calculate new business rates liabilities that will apply from April 1st 2023 to March 31st 2026. 

Overall, they will reflect a fall of 10% for the sector but it will depend very much on where the business is located and what their business is. 

The Valuation Office Agency, part of HMRC, have estimated that the overall open market rateable value of properties will fall from £16.3 billion to £14.6 billion (10%) from April.

The last revelation came into effect in 2017 and was based on rental estimates being paid in 2015.  The 2023 revaluation will reflect the changes in rents being paid during the intervening six year period which has been unprecedented. 

The biggest winners will be those with the largest floor space (1850m2) which will see their values reduced by 34.7%. 

Other notable examples of bigger being better include the iconic London department store Harrods which will see a 45% reduction from £32.73 million to £18 million next year while its rival from round the corner, Selfridges, will enjoy similar reductions from £30.5 million to £16.82 million. 

Superstores will generally see their rateable value fall by 14.9% while small shops could see a fall of 8.4% but the picture isn’t a universal reduction everywhere. 

Convenience stores could be looking at a 12.7% increase with smaller supermarkets in line for an 8.4% reduction. Even smaller services such as hairdressers and beauty salons could face an increase of 6.3%.

Business rates are calculated by multiplying the rateable value of business premises by a government mandated multiplier either 49.9p for small businesses or a standard rate of 51.2p.  This was confirmed as frozen before any eligible reliefs are applied. 

Special category description (sCat)Number of properties2017 rateable value (£)2023 rateable value (£)Change (£)Percentage change (%)
Large shops (1851+ m2)2,1801,247,433814,368-433,065-34.7
Large shops (750 – 1850m2)47078,11263,010-15,102-19.3
Hypermarkets (2500+ m2)2,2002,858,8112,431,783-427,028-14.9
Factory shops1,960176,920157,314-19,606-11.1
Retail warehouses/foodstores9,8002,008,8111,821,973-186,838-9.3
Amusement arcades75026,15024,233-1,916-7.3
Shops within specialist properties1,98032,71631,320-1,396-4.3
Sales kiosks5,45068,25667,190-1,066-1.6
Betting offices4,12071,24772,1819341.3
Airport let outs340136,439139,5193,0802.3
Post offices2,16032,08733,4061,3194.1
Hairdressing/beauty salons23,350153,449163,0689,6196.3
Kiosks within specialist property6908,6109,2356257.3
Food takeaways5,00041,94045,1033,1637.5
Large food stores (750 – 2500 m2)2,950651,013705,50254,4898.4
Farm shops1,60014,94516,6051,66011.1
Convenience stores7,250257,547290,30632,75912.7
Pharmacies within health centre1,85050,64257.6887,04613.9

It’s time to act

Chris Horner, insolvency director with BusinessRescueExpert said: “The reduction in capital gains taxes (CGT) and cancellation of corporation tax cuts mean that directors and business owners will have some important decisions to make in the coming months especially if they’re planning to close their business and take advantage of the tax benefits from a members voluntary liquidation (MVL)

“With the general economic outlook looking negative to say the least, this might be the best time to consider an orderly closure and to move into the next phase of their working career before circumstances force them to make a decision at a less favourable moment.”

We offer a free conversation for any director who wants to explore their available options at a convenient time for them.  All they have to do is to get in touch and book their timeslot. 

Then they will understand all the options available to them and what they could achieve in the next few weeks and months by taking decisions as early as they can.