Budget 2023 what small business can expect

UPDATED: This spring’s Budget will focus primarily on halving inflation, the first and most important of Prime Minister Rishi Sunak’s five pledges. But what can small business expect from Budget 2023?

Chancellor Jeremy Hunt is expected to offer only modest help for companies in the March 15 Budget, with no immediate tax cuts likely because of tight constraints on the public finances amid the economic downturn. This at a time when, from April 2023, businesses will be shouldering the highest tax burden since the Labour government after the Second World War.

What is the date for the Budget 2023?

Jeremy Hunt is due to make his Budget 2023 statement on Wednesday, March 15. It will be followed by a forecast on the economy and public finances from the Office for Budget Responsibility.

What time is Budget 2023 expected to take place?

The Chancellor is expected to address MPs in the Commons around noon to deliver the Budget.

How do I watch the spring Budget?

The Budget will be broadcast live on BBC television and streamed on ParliamentTV.

What can small business expect from Budget 2023?

Revamping ‘super-deduction’ tax break

Chancellor Jeremy Hunt and his Treasury team are understood to be looking at a successor to former Chancellor Rishi Sunak’s “super-deduction” tax incentive, a £25bn tax incentive which encouraged business investment by providing 25p off company tax bills for every pound of qualifying spend on plant and machinery, which expires in March.

Business groups including the CBI, IoD and Make UK, the trade body for manufacturers, are concerned about what happens when the super-deduction scheme for capital investment — a two-year measure offering 130 per cent tax relief on companies’ purchases of equipment — ends.

The CBI has suggested that companies initially be able to write off 50 per cent of the cost of any capital spending against tax, with the arrangements becoming more attractive as the public finances improve. This would give businesses an incentive to invest at a time when corporation tax is due to rise from 19 per cent to 25 per cent.

CBI director general Tony Danker said: “We know the economy can – and must – break out of its low growth trap, but we will need action on business investment to achieve it. Firms are seeing the end to the super-deduction with nothing to replace it but a big rise in corporation tax. This will have a huge impact on investment and leave the UK falling behind its global competitors.”

Make UK wants the Government to focus tax relief on investment in green plant and machinery, while the IoD wants the super deduction scheme retained on a permanent basis.

>See also: Super-deduction tax break – what is it and how does it work?

Business rates

The Federation of Small Businesses (FSB) wants the Small Business Rates Relief (SBRR) threshold raised to £25,000 (it is currently £15,000), while introducing a new “large business multiplier” for properties with a rateable value above £500,000. This move would not cost the Government anything, the FSB wrote to the Chancellor at the beginning of February.

Green vouchers

With the Government cutting subsidies for companies on their energy bills from April, both the FSB and the CBI want ministers to provide vouchers to small businesses to help them invest in “green” improvements to their premises, including heat pumps, better insulation and solar panels. The FSB has proposed a “Help to Green” voucher worth £5,000 with renovations.

Help with childcare

Business groups see help with childcare as key to getting more women back into a workforce depleted post-COVID and post-Brexit.

The CBI has called for Government support to help parents back into work via some free childcare for one and two-year-olds, while the FSB wants to increase the maximum amount claimable for tax-free childcare from £2,000 to £3,000 per year, as well as exempting nurseries from business rates.

Subsidies for mental health and wellbeing

Work and pensions secretary Mel Stride is reviewing the state of the British workforce ahead of the Budget 2023. One idea is to provide tax breaks to small business owners to help them support the long-term sick and disabled get back into work. There are 2.2 million long-term sick and disabled in the UK. These subsidies would cover physiotherapy, nursing and mental health support.

Digital skills and IT training

Another idea is to offer Government-funded job placements for disability and sickness claimants. The focus is expected to be on digital and IT skills for jobs that can be done remotely – helpful for those who are housebound but want to get back into work.

Fuel duty

The Government is expected to extend the 5p cut to of fuel duty, which was due to expire in April. Extending the cut for another year could cost in the region of £6bn.

R&D tax credits

The Government announced cuts to R&D tax credits for UK’s SMEs and start-ups in the Autumn Statement. From April 2023, the R&D tax credit for SMEs will decrease from 130 per cent to 86 per cent from April 2023.  Going forward, the R&D tax credit will be worth only 18.6p for every pound of R&D spend compared with the current 33.3p – changes that will cost SMEs £4.5bn in lost tax benefits over the first five years of the new system.

However, the Chancellor has said he is open to reforming the system again in 2024/5 and the FSB has suggested that he makes 2023-24 a transition year maintain R&D tax relief rate at 130 per cent.

Tax breaks for self-employed training

One glaring anomaly in the current tax system is that businesses can claim for training courses against tax but the self-employed cannot. The FSB would like this distinction to be removed.

What will not be in Budget 2023 for small business

At present, any pitches for cuts to corporation tax, National Insurance Contributions (NICs) or duties are being stonewalled.

“Computer says no is just the standard response you get most of the time from the Treasury, but it’s even worse this time round,” one business leader told The Sunday Times. “He mentioned pre-profit taxes, but every time we raise business rates, NICs and duties, the answer is no, it’s not the right time.”

This preview of what small business can expect from this year’s Budget 2023 will be continually updated.

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