By Anna Jordan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs
A mini Budget is taking place on Friday September 23.
Chancellor Kwasi Kwarteng is expected to make an announcement to give emergency help on the cost of living – and the cost of doing business – crises.
We’re looking at the reported measures that will affect small businesses.
Cancelling planned increase to corporation tax
When he was Chancellor, Rishi Sunak made plans to increase corporation tax from 19 per cent to 25 per cent from April 2023. Kwarteng will scrap that with a view to attracting more businesses to come to the UK. It will cost an estimated £17bn, according to The Times. However, the Institute for Public Policy Research (IPPR) has doubts – the UK had the lowest business investment of all the G7 in 2019 despite having the lowest corporation tax of these countries.
Reversal of NI rise
Reversing the National Insurance rise affects employers and the self-employed as well as employees. The Telegraph reports that the reversal could come into force before November payslips arrive.
Ash Majithia, a tax partner at Vialto Partners comments: “Employers will be encouraged by reports around the reversal of April’s NI increase as it will reduce the cost of employing labour, but they will be desperately hoping to see the detail. When will it happen? Is this a temporary reversal? And what does this mean for the increase in the primary threshold that happened over the summer? These are all questions that business will be keenly watching out for.”
More details of energy bill support for businesses
Today (September 21), details of the Energy Bill Relief Scheme for businesses were announced. The Guardian reports that the cost estimates of this support will be included in Friday’s statement.
>See also: Energy Bill Relief Scheme – how it works
‘Investment zones’ where businesses could benefit from less red tape
This measure would involve reducing regulation in certain parts of the UK to boost economic growth. The location of investment zones will be hand-picked by government, with businesses benefiting from lower taxes and red tape.
Majithia said: “Employers are bound to welcome lower tax and National Insurance burdens but will be looking for the detail. Where and when will the boundaries be drawn, how will employees split across different locations be treated, what will it mean for an employee contracted to one city but generally working from another, or primarily from home outside of the boundary?
“Nobody will object to saving money, but they will want to know how it can be implemented accurately and fairly without increasing the administrative burden.”
Cut in VAT
The Telegraph also reports that Truss is considering a reduction in VAT from 20 per cent to 15 per cent across the board.
Calls for self-employed and freelancer help
Small business bodies have been calling for help in key areas affecting the self-employed, including the unpopular off-payroll legislation.
IR35 specialist and tax insurance provider, Qdos, wants to see an IR35 review. CEO, Seb Maley, commented: “The Prime Minister has an opportunity to set the tone and start as she means to go on. Make no mistake, in recent years freelancers, contractors and the wider self-employed population have been let down by governments and hit with a raft of short-sighted tax changes – whether that’s IR35 reform, the National Insurance increase or the rapidly approaching Corporation Tax hike.
“Liz Truss has vowed to review IR35 – something which we hope the new Chancellor will shed light on in the mini Budget. Although, I should stress, that yet another review which amounts to nothing simply won’t cut it.”
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Source: SmallBusinessUK