A mini-budget will be held on Friday, September 23.
Chancellor Kwasi Kwarteng is expected to make an emergency bailout announcement amid the cost of living and cost of doing business crisis.
We are reviewing the announced measures that will affect small businesses.
Reversal of the planned corporate tax increase
When he was chancellor, Rishi Sunak planned to increase corporate tax from 19 per cent to 25 per cent from April 2023. Kwarteng will give it up to attract more businesses to the UK. It is estimated to cost around £17 billion The Times. However, the Institute for Public Policy Research (IPPR) doubts it – the UK had the lowest business investment of all the G7 in 2019, despite having the lowest corporate tax rate of any of these countries.
Reverse NI growth
The cancellation of the increase in national insurance affects employers and the self-employed, as well as salaried workers. Telegraph reports that the cancellation may take effect before the November settlement letters are received.
Ash Majithia, tax partner of the company Vialto partners comments: “Employers will be encouraged by the announcement of the reversal of the April NI rise as it will reduce the cost of employing labour, but they will be desperate to see the details. When will this happen? Is this a temporary reversal? And what does this mean for the increase in the primary threshold that happened in the summer? These are all issues that the business will be watching closely.”
Learn more about electricity bill support for businesses
Details of the energy bill relief program for businesses were announced today (September 21). Guardian says an estimate of the cost of that support will be included in Friday’s announcement.
“Investment zones” where businesses can benefit from less drag
The measure involves reducing regulation in parts of the UK to stimulate economic growth. The location of investment zones will be determined by the government, and businesses will benefit from lower taxes and red tape.
Majithia said: “Employers are bound to welcome the reduction in tax and national insurance burdens, but will be looking for details. Where and when will the boundaries be drawn, how will cross-location employees be handled, what will this mean for an employee who works in one city but usually works in another or is mostly at home outside the boundaries?
“No one will object to saving money, but they will want to know how it can be implemented accurately and fairly without increasing the administrative burden.”
Telegraph also reports that Truss is considering reducing VAT from 20 percent to 15 percent across the board.
Calls to help the self-employed and freelancers
Small business bodies are appealing for help in key areas affecting the self-employed, including unpopular unemployment legislation.
IR35 specialist and tax insurance provider, Qdos, wants to see a review of the IR35. CEO Seb Maley commented: “The Prime Minister has the opportunity to set the tone and start how she wants to go forward. Make no mistake, in recent years freelancers, contractors and the self-employed have been let down by governments and fell for a host of short-sighted tax changes – whether it’s IR35 reform, National Insurance rises or the fast-approaching Corporation Tax. hike
“Liz Truss has promised a review of IR35 – we hope the new Chancellor will shed some light in the Mini Budget. Although, I have to emphasize that another check that has no meaning will simply not do.