The Autumn Budget delivered by Chancellor Jeremy Hunt outlined a range of measures aimed at stabilising the economy but what did it mean for UK businesses? In this summary of the Autumn Budget for business, we explore the key changes and their impact on SMEs across the UK. Aiming to respond to an "international crisis with British values," Hunt highlighted three key areas of focus: growth, stability, and public services.
While some of the announced measures came as unwelcome news to some, businesses were reassured that the Autumn Statement had been costed and supported by figures from the Office for Budget Responsibility (OBR). Following the announcement, the OBR forecasted that these measures would reduce inflation from 9.1% that year to 7.4% in 2023.
The Chancellor confirmed that the UK economy was in recession, with the International Monetary Fund predicting a third of the world’s economies would follow suit. Hailing his statement as a “balanced plan for stability,” Hunt indicated that just under half of the Government’s £55bn consolidation would come from tax rises, with the rest from public sector spending cuts.
If you didn’t manage to catch the announcement, here we look at some of the key measures laid out and what these might mean for UK businesses in the coming months and year.
Businesses’ Finances
Business Rates
Some of the measures laid out in the statement offered welcome support, with the Chancellor unveiling a £14 billion business relief package. Business rates were no longer set to increase in line with CPI from April 2023 — a move expected to save businesses £9.3 billion over five years.
VAT Threshhold
The VAT registration threshold was also maintained until March 2026, keeping it well above EU and OECD averages.
NICs
The Government announced that the Employers NICs threshold would be frozen until April 2028, while retaining the Employment Allowance at £500,000. Around 40% of businesses were expected to pay no NICs under these measures.
Research and Development (R&D) Reforms
In his plan to make Britain the next ‘Silicon Valley’ and to make sure global corporations are paying the correct tax, the Chancellor announced reforms to R&D tax schemes.
To tackle reports of abuse and fraud in R&D tax relief, the deduction rate for the SME scheme will be cut to 86% and the credit rate to 10%, whilst increasing the rate of the separate R&D expenditure credit from 13% to 20%.
With the OBR confirming the new measures have no detrimental impact on R&D investment, the Government will work with the industry to understand what further R&D support SMEs will require.
Windfall Tax
An increase in windfall tax to 35% was also brought about by the Autumn Statement, leading to an overall increase in oil and gas companies’ tax to 85% on UK profits. Extended from December 2025, this increase is now set to last until March 2028. Coupled with a 40% tax on profits from older renewable and nuclear electricity generation, this new measure is set to raise £14 billion for the economy next year alone.
Personal Finance
Income Tax
In a series of changes to personal taxation and wages, the threshold for the top rate of income tax will be brought down from £150,000 to £125,140. Income tax thresholds will also be frozen until 2028.
In its largest increase ever, National Living Wage will rise to £10.42 from 1 April 2023, equating to an increase of 9.7% or 92p and representing an annual pay increase of £1,600 to the average full-time worker. As wages continue to rise, the changes to tax thresholds will leave millions paying higher levels of tax.
Despite the Chancellor claiming tax as a proportion of income will rise by just 1% over the next five years, statistics from the OBR show that tax as a proportion of GDP is likely to be at the highest level for more than 70 years.
Energy bills
The Energy Price Guarantee (EGP) which currently caps household bills at £2,500, is set to rise to £3,000 in April, with the cap staying in place until 2024. For businesses, increasing energy costs will lead to increased overheads and tightening of customer purse strings, adding to the mounting pressure many SMEs are already feeling. According to The Chancellor, the Energy Price Guarantee (EPG) will be kept under review, and after April 2024 a new plan will be developed to protect consumers from energy price rises.
Whilst there are steps being taken to decrease our reliance on importing energy, which will eventually reduce prices, these measures are too far in the future for businesses to feel a difference, and further support will be required to manage rising costs.
So, what does this mean for UK businesses?
These changes, as part of the wider Autumn Budget business strategy, were designed to provide targeted relief while still pursuing fiscal consolidation. Although the Chancellor acknowledged that businesses need support to stay afloat during what is set to be a tough recession and put some measures in place to soften the blow, the Government’s ambitious consolidation plan will undoubtedly lead to turbulent times ahead. Whilst many UK businesses will warmly welcome the news of tax increases reaching bigger global firms, smaller businesses will feel the impact from today’s announcement the most.
The worsening cost of living crisis coupled with reduced pay packets and rising energy bills mean a drop in consumer spending is something of an inevitability. This will come as unwelcome news for many SMEs, who are already taking the brunt of this storm from all angles. For the Government’s consolidation plan to be effective, these new measures must be accompanied by initiatives that will support and stimulate consumer spending, whilst allowing businesses the legroom to invest in operations, to flatten the recession and encourage economic growth.
What is certain is that businesses will need the vital support of alternative lending to get them through the coming months. In times of financial hardship, the big banks and traditional lenders tend to start closing their doors to supporting businesses, tightening the belt and putting in much stricter lending criteria. Therefore, it's vital that alternative lending remains open for business. As this Autumn Budget business package took effect, many SMEs sought out flexible business finance solutions to stay afloat amid rising costs.
At Time Finance, we work with some 10,000 business owners already, and while they navigate the current landscape, we know that they - and many more - need our services now more than ever.