Chancellor Jeremy Hunt delivered his first budget on March 15th, which proved to be a relatively unsurprising one. With pre announced policies, we were prepared for a lot of the budget’s changes, although the Lifetime Allowance abolition wasn’t predicted.
A running theme for this government over the past years has been an emphasis on “levelling up” and this rang true in the Budget which focussed on investment and growth, meaning good news for tech companies.
However with rising costs continuing, and a lack of extended support for energy bills for businesses, did the budget do enough for your small business clients?
To give you an overview of the Budget and what it means for your clients, here's everything from the Spring Budget 2023 businesses need to be aware of:
As previously announced, the Chancellor confirmed changes to Corporation Tax, increasing the main rate from 19% to 25% from April 1st 2023 onwards.
Although this remains the lowest corporation tax rate in the G7 group, this large hike still acts as a strain for businesses who are already experiencing tight cashflow due to rising costs across the board.
Perhaps the most talked about change is Hunt’s introduction of “full expensing”.
For a three year period from April 1st 2023, businesses will be able to fully expense new plant and machinery equipment.
This acts as a replacement for the previous “super deduction” scheme that comes to an end on 31st March. This comes as positive news for businesses that invest in the UK, freeing up more cash to invest into their growth.
However the full impact of this scheme will most likely only be felt by larger businesses. Most small businesses would have been covered by the previous £1 million cap.
In addition, the changes announced are only for a limited time. For most small businesses, this will not be enough time to naturally have the cashflow to invest in new equipment.
With this in mind, small businesses could really benefit from speaking to their accountants and advisors about funding to invest in new plant and machinery to benefit from the scheme.
To speak to one of our funding specialists about purchasing new plant and machinery, log a funding search.
R & D tax credits
Jeremy Hunt also announced increased support for R&D intensive SMEs.
Eligible loss making companies (those who incur R&D expenditure equal to at least 40% of their overall annual costs) will now be eligible for “enhanced credit” worth £27 for every £100 of qualifying expenditure.
This comes as good news for start up businesses in innovative and tech sectors. However, the high barrier for entry to be qualified as “R&D intensive” and only being available for loss-making businesses, does mean the benefits will only be felt by a limited number of companies.
The government’s focus on ‘levelling up’ was felt during the Spring Budget as they announced 12 new investment zones.
Each zone will receive £80 million over 5 years in flexible support from the government in tax incentives and investment.
The new investment zones aim to attract more companies and investment in these areas, with the hopes to grow essential sectors such as: green industries, digital technologies, life sciences, creative industries and advanced manufacturing. Another win for innovative businesses.
Duty Freeze - Good news for the UK’s pubs
Hunt also announced his “Brexit pubs guarantee,” extending draught relief so that duty on draught beer will be 11p cheaper than in supermarkets.
Hopefully incentivising more customers, the duty announcement is good news for small pubs that have felt the squeeze over the last couple of years.
Additionally, the Budget announced the 5p reduction in fuel duty. This will benefit the majority of businesses, as the cost of fuel naturally impacts the importation, distribution, and transport of all goods.
Lifetime and Annual Allowance
In an attempt to bring retired skilled workers back to the labour market, the government abolished the Lifetime Allowance and increased the Annual Allowance from £40,000 up to £60,000. So those who may have had limited contributions to their pensions over the last few years, can now significantly boost retirement wealth by returning to work.
While it could mean good news for businesses that are struggling to recruit skilled workers, realistically the biggest impact will most likely affect the NHS.
The budget announced continued relief for energy bills for households, with it staying at £2500. However there was no mention of extended support for businesses.
Although wholesale prices have dropped and costs should be going down, it will likely still not be enough for most.
In fact some businesses have not been able to pay staff due to high energy bills leaving them at risk of closure. This lack of support for businesses comes as a disappointment for most and could mean serious cashflow concerns for business owners.
What should small businesses be doing post spring budget?
The Budget might not have brought everything the business community had hoped for. And with rising costs and a lack of support for those outside of innovative sectors, the majority of your clients may need some extra support.
A key way for businesses to get on top of their financial health would be to ensure their credit score is looking positive.
Checking the credit profiles of their customers and debtors will also put your clients in good stead.
If your client is concerned about costs, it’s likely that the businesses they work with will be too. So checking whether debtors are paying their customers on time, will help your clients to set realistic payment terms and reduce their exposure to risk.
And with any cashflow concerns, applying for funding can help your clients bridge that gap.
You can help your clients access all of the above in one place, with Client Tools.