Breaking down the Budget

At first glance the Chancellor, didn’t appear to have many significant changes for businesses, as part of his Autumn Budget.

However, there were some notable measures announced by Rishi Sunak that will be a benefit to business…and some others that we need to be prepared for!

Inspire Director Chris Downing answers your questions about the detail of the Autumn Budget.

Annual Investment Allowance

What is the Annual Investment Allowance?

Any business purchasing qualifying assets will usually claim writing down allowances (WDAs) of either 18% or 6% of the cost per annum, to claim tax relief for the expenditure.

The Annual Investment Allowance, or AIA, is available to claim against qualifying plant machinery expenditure and allows 100% of the expenditure (up to the relevant maximum) to be claimed immediately, therefore accelerating the tax relief and simplifying the overall process.

What can I use the Annual Investment Allowance for?

AIA is available to claim on most plant and machinery, including office furniture and equipment, vans and commercial vehicles (up to the annual maximum), however, it’s specifically not available to claim on cars – instead WDAs (18% or 6%) or first year allowance (100%) can be claimed, depending on the CO2 emissions.

How is the Annual Investment Allowance changing?

The Chancellor announced that the AIA will remain at its current level of £1,000,000 until 31 March 2023.  The temporary level of £1,000,000 has been due to permanently drop back to £200,000 from 1 January 2022 – but will now remain until March 2023.

Research & Development

What were the main changes to R&D tax reliefs?

The government is keen to stimulate R&D in the UK and has, for many years, had a range of support available to help UK businesses that have the potential to undertake world-class innovation and R&D.

From April 2023, R&D tax relief for SME’s where an additional 130% relief that can be claimed on qualifying costs when calculating the company’s taxable profits – will be refocused towards UK-based businesses only.

The Chancellor announced a series of reforms to R&D, including:

• The current tax reliefs will be expanded to include cloud computing and data costs
• Businesses will no longer be able to claim for costs relating to overseas contractors, or any R&D projects conducted outside of the UK
• Further investment into Innovate UK (an organisation that assists R&D-based businesses)

Business rates

How much will I benefit from the discount in business rates?

If your business is in the retail, hospitality or leisure sector then you will be eligible for a 50% reduction on business rates for the next year (2022/23), up to a maximum of £110,000.

What were the other changes to business rates?

Business revaluations will also take place more frequently, every three years, rather than every five years, from April 2023.

Another notable change benefiting businesses (from any sector) looking to grow or expand is ‘business improvement relief’ – this allows businesses making improvements to their property will not see their business rates rise for 12 months.

If you’d like to know more about the Autumn Budget and our advice for your business from the changes announced by the Chancellor, then you can listen to our latest 2 + 2 podcast episode.

There’s also more from my colleague Dan Keets on the Annual Investment Allowance in our Budget 2021 breakdown series of advice blogs.

Alternatively, contact us or call 01202 717867 and our friendly team will be happy to help you.