Chancellor Jeremy Hunt will deliver the Autumn Statement to MPs on Thursday, 17 November, delayed from 31 October. Currently, no exact timing is confirmed, but Thursday’s announcement in the House of Commons may start around 12.30 pm.
The Government could announce billions of pounds worth of spending cuts and tax rises, which has left the nation on tenterhooks.
Owner-managed businesses have had it tough over the past couple of years. COVID impacted income levels and created resource issues, supply chain and staffing issues.
Now, homeowners, workers and business owners are facing a tricky winter with a sharp increase in the cost of living. It is becoming harder to maintain a certain standard of living. The cost of food, fuel and energy prices continues to rise.
Atop of this, keeping up with unprecedented changes and U-turns in government budgets is unsettling.
Here we share our Autumn Statement predictions and what they could mean for business.
Will the Autumn Statement put us in the doldrums?
It is hard to stay positive when Mr Hunt warns, “we will be asking everyone for sacrifices”.
“Many owner-managed businesses may struggle as we enter 2023,” says David Murphy, Tax Director at Grenfell James. “The current pressures of interest rates, energy prices and living costs are all additional for many who still need to pay back COVID loans,” he explains.
David adds, “It looked like there would be some respite for a fleeting moment, with a reversal of the planned increase in corporation tax to 25% and dividend tax increase to 1.25%, now effective from April 2023, reducing retained profits for business owners.”
Could the Autumn Statement unveil more tax hits?
Yes, according to David.
“Worryingly, we have heard murmurings that even more tax hits could be on the way by reducing the meagre dividend allowance even further, or perhaps, more radically, aligning dividend tax rates with income tax rates,” he suggests. How could further tax hits affect businesses?
Reducing the dividend allowance or aligning dividend rates with income rates means big decisions for businesses.
David explains, “If we see more tax hits, this will affect all decision-making for small businesses. For example, do they cut down on investment or staff? More tax cuts mean business owners will need to review all expenditures and potentially raise prices to keep the business going.”
He adds, “Those Businesses who are currently eligible to receive business rates relief are also shortly going to be subject to even more increases as this support is likely to be withdrawn.”
What could the Government do to help?
Business growth is likely to be high on the agenda for a recovering economy.
“It would be great if we could see some positivity from the government, deploying measures that point to growth and keep the economy going,” offers David.
“However, all of the talk about filling the ‘£50 billion black hole’ suggests this would be difficult,” he explains.
David adds, “Many sectors are crying out for further help with energy costs, business rates and VAT – none more so than the hospitality sector. Reducing VAT to 15% or lower could help to stimulate growth.
Whatever the Autumn Statement unveils, it is already clear that small businesses will have to take a step back in 2023 and look at their costs, cash flow and overall business strategy to remain profitable.
We remain cautiously optimistic. Britain is a nation of many successful entrepreneurs and forward-thinking businesses.
At Grenfell James, we work with ambitious companies across Warwickshire and London, using technology to simplify processes and accelerate business growth.
If you need help or advice with your business growth plans, tax efficiency or profitability, don’t hesitate to contact the Grenfell James team at 01789 294 484.