Autumn Budget 2022 Summary for Small Businesses

The OBR forecast that inflation would average 9.1% this year with the economy expected to grow by 4.2%. This changes significantly next year with inflation expected at 7.4% and growth of just 1.3%. The UK is expected to enter into a recession in 2023 and the budget announced reflects the scale of the challenges facing the country as we enter recession.

Income Tax and National Insurance

Income Tax and National Insurance contributions thresholds are fixed at their current rates until April 2028. The personal allowance remains at £12,570.

The Income Tax additional rate (45%) threshold will be lowered from £150,000 to £125,140 from 6 April 2023.

Wages

The “National Living Wage” paid to people aged above 23 will rise by 9.7% from the current £9.50 to £10.42 an hour from April 2023.

The Employment allowance is retained at £5,000.

Dividend Allowance

The Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023, and to £500 from April 2024.

Capital Gains Tax

The Capital Gains Tax Annual Exempt Amount will reduce from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.

Inheritance Tax

The Inheritance Tax (IHT) nil-rate band and residence nil-rate bands will be fixed at their current rates until April 2028.

VAT

The VAT registration and deregistration thresholds will be maintained at the current levels of £85,000 for an additional two years from 1 April 2024.

Corporation tax

Confirmation of corporation tax increase to 25% from 1 April 2023, affecting companies with profits of £250,000 and over. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%, with profits between these two figures being subject to a tapered rate.

Reforms to R&D tax reliefs – for expenditure on or after 1 April 2023, the Research & Development Expenditure Credit rate will increase from 13% to 20%, the SME additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. The government is continuing the review of R&D tax reliefs and will consult on the design of a single scheme

Stamp duty

Stamp duty was cut from 23 September 2022. Currently no stamp duty is paid on the first £250,000 of property value (previously £125,000). For first time buyers, no stamp duty is paid on the first £425,000 (previously £300,000).

The cut will remain in place until 31 March 2025

Others

  • Cost of Living Support – additional cost of living payments to support the most vulnerable households, including up to £900 of additional support in 2023-24 for households on means tested benefits, including those receiving tax credits
  • The government’s energy price guarantee will be kept for a further 12 months at an average of £3,000 for a typical household, up from £2,500 at present
  • Electric cars, vans and motorcycles to pay road taxes from April 2025
  • Company Car Tax (CCT) Rates – the government is setting rates for CCT until April 2028 to provide long term certainty for taxpayers and industry
  • First Year Allowance for electric vehicle chargepoints will be extended to 31 March 2025 for Corporation Tax and 5 April 2025 for Income Tax
  • Import taxes removed on more than 100 goods, including some food products, for two years to reduce costs
  • Social housing rent increases in England capped at 7% from April 2023 – instead of 11% due to inflation
  • Lifetime cap on social care costs in England due in October 2023 delayed by two years
  • Business rates relief package with an almost £14bn tax cut on business rates to benefit about 700,000 businesses