Last week, the new Chancellor outlined his controversial mini-budget, which prompted instability in the financial markets, prompting wide-spread criticism and subsequent U-turns. However, it did contain some initiatives to encourage business investment and growth:
Energy Bill Relief Scheme
In response to energy bills soaring and to help businesses continue trading through the winter, the Energy Bill Relief Scheme (EBRS) will provide businesses with discounts on gas and electricity unit prices. Discounts will be applied between 1 October 2022 and 31 March 2023.
Corporation Tax
The planned increase in Corporation Tax has now been scrapped, which will come as welcome news to many. In 2023, Corporation Tax was due to increase to 25% for company profits over £250,000, but this is no longer the case, and tax will remain at 19%.
Annual Investment Allowance
The temporary Annual Investment Allowance (AIA), providing tax relief for plant and machinery investments up to £1m, has now become permanent, continuing to stimulate business investment.
Seed Enterprise Investment Scheme
For entrepreneurs hoping to raise capital to launch new business ventures, the expansion of the Seed Enterprise Investment Scheme (SEIS) will be beneficial. SEIS offers tax relief to individual investors buying shares in a new company. Previously, the limits raised under SEIS were £150,000 for a company and £100,000 for an individual investor. From April 2023 this will be raised to £250,000 and £200,000 respectively.
IR35 Repeal
The introduction of IR35 tax rules for the private sector in 2021 added extra costs and administration for businesses using contractors and subcontractors. These rules have now been repealed, which will simplify off-payroll working. Responsibility for paying IR35 tax will now return to the individual rather than the businesses benefiting from their services.
Low Tax Investment Zones
The government is in discussion with 38 local authorities to create regional Investment Zones which will benefit from lower taxes and encourage business investment. The South is well-represented, with Dorset Council and Southampton City Council both included. As part of the plan, businesses starting up or expanding in selected Zones will be given tax breaks, including tax relief for expenditure on plant and machinery, and newly occupied premises will benefit from a cut in business rates.
According to the Chancellor, we should expect to see a fuller package of announcements later in the autumn. In the meantime, First Capital Finance is on hand to assist businesses with various financing options and measures to help with cashflow management.
Get in touch here, or call 01202 434000, to discuss how we can help keep your business moving forward in these challenging times.
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