Mini-Budget 2022: What SMEs need to know
Tax
Corporation Tax
The previously announced increase from 19% to 25% (due to take effect in April 2023) has been scrapped. It means businesses will continue to pay 19% on their taxable profits.
Income Tax
The basic rate of income tax will be cut to 19p in April 2023 – a year earlier than planned. Treasury figures show the changes will benefit more than 31 million people. In an unexpected move, the chancellor also abolished the 45p additional rate for people who earn over £150,000 a year. As it stands, these changes will only apply in England, Wales and Northern Ireland.
National Insurance
The 1.25 percentage point rise in National Insurance contributions will be scrapped from 6 November.
IR35
The 2017 and 2021 reforms to the off-payroll rules (also known as IR35) will be repealed from April 2023.
It means workers providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions.
Energy
Energy Bill Relief Scheme
The government’s support package to limit wholesale gas and electricity prices for business customers will reduce their bills by up to half their expected level for six months.
The discount, which will be applied automatically from 1st October 2022, will apply to organisations on fixed contracts, variable and flexible tariffs. The scheme is due to last until the end of March next year, with firms deemed the most vulnerable offered further help.
It will apply in England, Wales and Scotland. A parallel scheme, based on the same criteria and offering comparable support, will also be established in Northern Ireland, where the energy market operates differently.
Investment
Annual Investment Allowance
The temporary £1 million level of the Annual Investment Allowance is to be made permanent, instead of a fall to £200,000 next year.
It’s designed to support business investment, provide firms with more stability, and make tax simpler for any business investing between £200,000 and £1 million in plant and machinery.
Investment Zones
The government has announced plans to introduce Investment Zones across the UK. They will benefit from tax incentives, planning liberalisation, and wider support for the local economy.
The first zones to are expected to include areas in and around Blackpool, Falmouth, Plymouth, Sunderland and Hartlepool.
Finance and Funding
Seed Enterprise Investment Scheme (SEIS)
From April 2023, companies will be able to raise up to £250,000 of Seed Enterprise Investment Scheme investment - a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from two to three years.
Ministers say the changes will help more than 2,000 companies a year.
Company Share Option Plan (CSOP)
From April 2023, qualifying companies will be able to issue up to £60,000 of Company Share Option Plan options to employees, double the current £30,000 limit.
Local Growth Funds
The government has committed to streamlining the range of competitions, grants and funds operated by local authorities. It says the changes will reduce bureaucracy for councils, giving them the flexibility to deliver funds locally.