Autumn Budget 2023 Summary for Small Businesses

Growth

The economy is expected to grow by 0.6% this year and 0.7% next year, rising to 1.4% in 2025; then 1.9% in 2026; 2% in 2027 and 1.7% in 2028.

Inflation is forecast to fall to 2.8% by the end of 2024 and to the Bank of England’s 2% target rate in 2025.

Taxation

Full expensing tax break has been made permanent. This allows companies to deduct the full cost of investments in new machinery and technology to lower their taxable profits.

For employees, the Main rate of National Insurance is cut from 12% to 10% from 6 January 2024. This is paid on earnings between £1,048 and £4,189 a month.

Class 2 National Insurance contributions are abolished from April 2024. These are paid at £3.45 per week and mean a saving of £179.

Class 4 National Insurance contributions paid on self-employed profits between  £12,570 and £50,270 is reduced from 9% to 8% in April 2024.

The retail, hospitality, and leisure businesses in England will continue to receive a 75% discount on their business rates for an additional year.

Wages and benefits

The National Living Wage will increase from £10.42 to £11.44 an hour from April 2024. It will apply to employees aged 21 and above (previously 23 and above).

Benefits will increase by 6.7% and state pension by 8.5%. There will be tougher requirements for those who claim benefits to look for work. People claiming benefits will face mandatory work experience if they do not find a job within 18 months.

Local Housing Allowance rates are unfrozen and increased to 30% of local rents.

Other

Funding of £4.5bn to attract investment to strategic manufacturing sectors, including green energy, aerospace, life sciences and zero-emission vehicles.

£500m over the next two years to fund artificial intelligence innovation centres.

Financial incentives for investment zones and tax reliefs for freeports extended from five years to 10 years, with new investment zones announced for the West Midlands, East Midlands and Greater Manchester.

Funding of £5m for Imperial College and Imperial College Healthcare NHS Trust to set up Fleming Centre to work on health innovations.

Households living close to new pylons and transmission infrastructure to get up to £1,000 a year off energy bills for a decade.

Alcohol duty is frozen until 1 August 2024. Duty rate on tobacco products increases by 2% above RPI inflation.