What the government’s budget means for your business

The UK’s cost of living crisis – and opinions on how to combat it – continues to rumble on into what looks like being another winter of discontent.

New chancellor Kwasi Kwarteng announced his first mini-budget last month, revealing his plans for a number of tax cuts he believed would trigger growth in the UK economy.

Included is a cut to the basic rate of income tax (the first time it has been reduced since 2008-2009) from 20 pence in the pound to 19p on earnings between £12,571 and £50,270.

Kwarteng’s measures were met with such fervent disapproval from all quarters. So much so that the government, now led by Liz Truss, has backtracked markedly, and performed a U-turn on the most unpopular budgetary measure – the abolishing of the 45% top rate of income tax for the highest earners.

The treasury will, of course, point to other avenues of help available for small-to-medium enterprises (SMEs) in the form of assistance with one of the hottest topics du jour, energy bills. The Energy Bill Relief Scheme was announced just ahead of Kwarteng’s mini-budget and aims to help businesses and non-domestic energy users.

So, what do the changes to the financial landscape mean for businesses?

A rise in corporation tax was to be implemented in April, with a small number of businesses affected. This increase was announced in the spring 2021 budget and gave the concerned businesses two years to prepare.

Most smaller businesses – those with profits below £50,000 – were to stay at the lower corporation tax rate of 19%, the existing rate in England, Wales and Northern Ireland since 2017.

Corporation tax for firms with an upper-profit threshold of a quarter of a million pounds (an estimated tenth of tax-paying companies) was to rise to 25%.

What isn’t yet known is how long the 19% rate will stay in place. We can reasonably expect it to remain for another 18 months but there may yet be a change by a government looking to raise revenue.

Trading circumstances remain difficult, meaning that some medium-term stability is a crumb of comfort for business owners. The 2022 landscape, affected to varying degrees by Britain’s departure from the EU and the COVID-19 pandemic, doesn’t necessarily make for great viewing for managers.

It’s believed a third of SMEs who had been exporting to EU countries have now given up. Without the freedom of movement or ease of movement previously available, many companies just don’t feel it’s worth the trouble.

In short, there appears to be no end in sight for the cost-of-living crisis and the only certainty about the immediate future is that challenges for are coming thick and fast, for individuals and businesses.

This is despite a 1.25% National insurance cut, which comes into effect next month.

What is crystal clear is that, with costs spiralling out of control, small businesses currently need every assistance they can get. Any SME that is paying over the odds for their gas and electricity supply may have been mis-sold the deal their broker or third-party intermediary arranged on their behalf.

If, for instance, the broker wasn’t 100% clear, honest and open about the commission they earned for their role in your energy deal purchase, it may have been added on to your company’s monthly bills.

If this sounds eerily familiar it’s high time you, as a business owner, took action to recover your money.

Barings Law can examine the fine details of your energy contract to see if your business has been mis-sold your utility supply.

Our customer service team may be able to give you reliable, accurate information in a free initial consultation to see if you have a case to make a claim, and we will take on your case on a no-win no-fee basis, meaning there is no financial risk to you.

If you’d like to get your claim started, call us on 0161 200 9960 or click the bottom-right icon to start a webchat.