ICAS: A mixed bag of unexpected giveaways from the Chancellor
Commenting on today’s Autumn Statement by Chancellor Jeremy Hunt, ICAS said the budget is a mixed bag of messages.
Bruce Cartwright CA, ICAS CEO said: “This is a statement full of mixed messages. Of course, it’s good to see measures to support those on the lowest incomes such as raising the national minimum wage, but it’s Britain’s small businesses who will carry the burden of this increase, not the government.
The increase in the national minimum wage to £11.44, a 9.8% increase on last year, means employees on the minimum wage will now earn £20,820 as full-time equivalent. The reduction of employee NICs from 12% to 10% means an across the board saving for anyone below state pension age, earning above £12,570 per annum, regardless of where they are employed in the UK. To illustrate, an employee earning £40,000 per year will save around £550 a year in NICs.
Abolition of Class 2 National Insurance Contributions (NICs), at the same time as reducing Class 4 NICs, is a welcome simplification of the system. The change means that someone with profits of £30,000 will see a reduction in NIC contributions of £353.70, while someone on a salary of £30,000 will save £349. But anyone earning profits above £30,000 won’t see the same level of benefit as someone on a salary over £30,000. So, it’s not looking quite as rosy for the self-employed as perhaps the Chancellor led the Commons to believe.
We’ve been asking for full expensing for companies to be permanent to give businesses much needed upfront tax relief on any investment they make in certain kinds of new and unused equipment and machinery for some time. This announcement gives companies confidence about the tax relief they can expect to receive on their planned capital spending. We will want assurances that this change will last beyond the current government.
The Chancellor has confirmed that a merged scheme for R&D tax relief will go ahead, but we feel that the start date of April 2024 is too soon, and we wanted more time for proper consultation. We support a simpler, single scheme that would be easier for companies to deal with, reducing the scope for error and limiting opportunities for abuse.”