What the Autumn Statement means for you, one week after it was delivered

‘The apathy and delay in Christmas shopping is a concern as managing the supply chain and stock levels becomes even more challenging – nobody wants to over-order and be left with huge surplus festive stock, that would be the proverbial icing on the Christmas cake.’

Adie is just one of the millions of business owners up and down the country trying to work out the implications of the Chancellor’s decisions. Hunt’s financial measures included tax rises that will directly affect small and medium-sized businesses, while others will mean that consumers will have less to spend at the shops.

Recipe for ‘longer and deeper’ recession

Hunt’s measures for consumers mean that most of us will pay more tax and have less disposable income, especially since our wages are already being eaten up by inflation.

People’s real disposable household income is set to fall by seven per cent over two years, after the Chancellor’s measures included freezing tax thresholds for most households – meaning more will pay higher tax rates – and reducing the rate at which people will pay higher rate tax.

Martin McTague, national chair of the Federation of Small Businesses (FSB), says that Hunt has piled ‘more pressure on the UK’s 5.5million small businesses, their employees, and customers.

‘Small businesses, which account for more than 16million jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late,’ he says.

‘On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.’

Lewis Shaw, founder of mortgage broker Riverside Mortgages, says that consumer sentiment is ‘currently on the floor, with daily negative news taking its toll on us all. The Government could have done far more to tackle the cost of living crisis and is tinkering at the edges,’ he adds.

Business-specific measures

As well as the measures that will make everyone poorer, Hunt brought in some new rules for businesses that met with a mixed response.

One of the more generous measures in the statement was 
an increase in Business Rates 
Relief for hospitality, leisure and retail businesses, a move that will cost the Government an estimated £14billion.

Rachel Hayward, managing director of Ask The Chameleon, a company which helps small businesses write grant and bid applications, described this as ‘a ray of hope’.

She adds: ‘I hope that the discount for retail and leisure from 50% to 75% will make it easier, for our high street business owners and carry them through this winter into the future.

‘Yet for the majority, this “budget” did not go far enough.’ Other measures will harm business owners. These include the reduction of the £2,000 dividend tax allowance to £1,000, falling later to £500.

Many small business owners pay themselves a combination of dividends and salary and will be worse off under this new rate. Martin McTague says this will be a ‘bitter blow to hard-working owners of small, limited companies trying to pay the bills, earn a living and grow their business’.

He explains: ‘This is a group which was excluded from direct support during the darkest days of Covid, then more recently pushed out of the cut in National Insurance.’

Corporation tax will also rise from 19% to 25% in April. However, businesses with less than £50,000 of profits will still pay 19%, and those with profits between this level and £250,00 will pay tax on a sliding scale between 19 and 25%.

‘The overt increases in Corporation Tax, dividends tax rises and a lowering of the tax-free threshold on those dividends are set to hit the small business population where there is increasingly less and less to give,’ says Debbie Porter, the managing director of Destination Digital Marketing.

‘Couple these with the stealth taxes in the form of freezes on the thresholds for National Insurance, Employment Allowance and VAT, and we are looking at a crippling time for small businesses over the next two years,’ she says.

Other costs to bear

As well as these tax changes, businesses are dealing with rising costs and will have to pay higher wages out of them in many cases, as the Chancellor raised the National Living Wage and Minimum Wage rates as part of his Budget.

The Chancellor also froze the threshold at which businesses must register for VAT. Until 2026 businesses have to register for VAT when their turnover reaches £85,000 a year, and the FSB’s research shows one-in-four (24 per cent) of small firms and the self-employed are held back by the VAT threshold.

Small businesses will also see their energy costs rise after April, when the current energy support scheme is replaced with energy at a higher rate.

Steadying the ship?

But while many business owners feel the cost of the Autumn Statement is too high to bear, others are grateful for some more ‘sensible’ tax policies.

‘Stability is more important than minor tax rises,’ says business accountant Chris Maslin from Go Eo. ‘Zany budgets with lots of wild changes force business owners to reconsider their options. So, it gets a mild thumbs-up from me, to help us recover from the devastation caused by Boris and his cronies.’

Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial, lays the blame at short-lived Prime Minister Liz Truss’s door.

He explains: ‘What Truss did was knock confidence in our national finances and Hunt has had to stabilise this with a very boring, unambitious budget. Unfortunately, although this settles questions over our ability to pay our debts, it doesn’t inspire growth.’

But not all business owners believe that there won’t be more changes in the near future. ‘In any moment in time they can simply reverse the previous version of their decisions so I’m more worried on how to keep my business afloat among so many changes,’ says Robert Bolohan, founder of translation agency Lotuly.

And some business owners are still hoping that a change of government will make life better for business. ‘Liz Truss was reckless and Jeremy Hunt was stale, but what we needed was someone as ambitious as Truss and as credible as Hunt, and maybe that’s a new Labour government,’ says Samuel Mather-Holgate.

However, businesses may have a tough winter to get through before we can even think about changes like this. With companies including Joules and Made.com already gone, many others will be asking if they can weather the storm.

‘We are looking at a crippling time for small businesses over the next two years’

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