Experts from a West Midlands accountancy firm have given a mixed reaction to last Wednesday’s (November 22) Autumn Statement, saying that although announcements were encouraging the “devil will be in the detail” of the measures announced.
Prime Accountants held a round table event at its Coventry offices in partnership with the Coventry and Warwickshire Chamber of Commerce, giving business experts across the region a chance to digest and comment on the impact of the statement as it was delivered.
Delegates heard several key takeaways from Chancellor Jeremy Hunt’s statement, with the main headline being the cut in National Insurance from 12 per cent to 10 per cent from 6 January benefiting working people.
Elsewhere in Mr Hunt’s statement, he announced that full expensing will be permanent, suggesting businesses can claim back 25p in corporation tax for every £1 spent on IT, machinery and equipment.
For the self-employed, Class 2 National Insurance was abolished, meaning a tax cut of £192 per year for the average self-employed worker.
The minimum wage will rise from £10.42 to £11.44 per hour in April 2024 and the state pension triple lock was kept in full, rising 8.5 per cent in April to £221.20 a week.
New Investment Zones were announced for both the East and West Midlands, which are expected to drive private investment in the region of £3bn, while there was also an announcement of a £50m funding pot for apprenticeships.
Reflecting on the statement after the round table event, Emma Clewes, head of tax advisory at Prime, said: “There have been amendments to tax rates but no fundamental changes to the rules, so this helps businesses to plan their tax cash flows.
“Extending full expensing is great, but for the majority of SMEs they do not use the current annual investment allowance limit and may not benefit immediately to the extent Mr Hunt suggests in cash terms, particularly if they have losses. Businesses still need to understand how the various tax rules work and how it affects their particular tax position and the timing of the relief/benefit.
“The impact of raising the National Minimum Wage will be borne by business, increasing cost pressures. Reducing employees’ National Insurance provides in-the-pocket benefits to the employees but the overall tax implication to the Exchequer is not reduced. Increased wages and implementing the single pot pension will be a further compliance burden to the employer.”
Considering how positive the measures announced were, Emma added: “The overall feel was heavy on generating large investment – but how does this filter down to SMEs?
“The government seems to be supporting tech and creating investment with investment zones, but there is more detail to be digested.
“The only real surprise was the abolition of Class 2 National Insurance and reduction in Class 4, which had not really been speculated on a great deal for the self-employed. A number of other areas where there had been speculation, such as Inheritance Tax, CGT and possible VAT threshold changes for example, were omitted.”
For more information on Prime Accountants, which has offices in Solihull, Birmingham and Coventry, visit https://primeaccountants.co.uk.
