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Updated: 7 December 2023
Chancellor Jeremy Hunt talked through his new Autumn Statement last month, setting out the Government’s spending plans for the next year. He looked to provide positive news for small businesses by prioritising growth, and spoke of plans to ‘remove the barriers’ to growth for businesses of all sizes.
Let’s take a look at the key points of the statement and how it could impact small businesses over the coming months.
The chancellor said forecasts from the Office for Budget Responsibility show the economy will grow by 0.6% this year, and that it’s now 1.8% larger than it was before the pandemic. Inflation is also expected to fall to 2.8% by the end of 2024 and reach the Bank of England’s target of 2% by 2025, which should ease the pressure of the cost of living crisis around the UK.
It was also announced that £4.5 billion will be invested in manufacturing between 2025 and 2030, as well as another £1 million into aerospace and green technology businesses – showing growth to be a main focus.
The most exciting announcement for businesses was the ‘110 growth measures’, which aim to reduce inflation and increase business investment by around 1% of GDP.
The growth measures include making full capital expensing permanent, allowing businesses to claim corporation tax back if they invest in business equipment. Plus, class 2 National Insurance contributions for the self-employed will be abolished, and class 4 contributions will be cut by one percentage point, which could help sole traders save hundreds of pounds per year.
The 75% business rate discount for the hospitality sector was also frozen, which is worth £4.3 billion and will be hugely beneficial to an industry still bouncing back from the pandemic.
The living wage increase from £10.42 to £11.44 an hour will mean a significant change for both employers and employees in the coming months. The new rate is also set to apply to 21 and 22-year-olds for the first time, which will further impact on small businesses that rely on young labour. However, there were plenty of other announcements made in this Statement that could also make an impact.
The pandemic showed the potential for remote working, which has had positive implications for those who might have been unable to commute but could feasibly work from home. The chancellor’s goal of reassessing the guidelines of capability based on the new remote working world aim to bring many more people into the workplace next year.
The chancellor announced four new investment zones – areas that have been thriving in recent years, and will now receive funding to aid their expansion. The investment focuses on advanced manufacturing in Greater Manchester and the West Midlands, green industries in the East Midlands, life sciences in West Yorkshire, and two Investment Zones for Wales – including Wrexham, which has seen recent popularity due to its local football club.
The chancellor will cut the main 12% rate of employee national insurance contributions by two percentage points to 10% from 6 January 2024. This will affect 28 million people, saving someone on an average salary around £450.
Benefits are set to increase by 6.7% next year in line with September’s inflation rate, but the chancellor chose to focus more on getting people back into work. £1.3 billion is being invested in helping people with health conditions find work, and a further £1.3 billion will help to bring the long-term unemployed back into the workforce. This is a positive move for small businesses who are struggling to find staff.
If you need finance to help adjust to any of the above changes, you can apply for a loan or line of credit in minutes. Check if you’re eligible today.
04/12/23: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.
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