Chancellor Jeremy Hunt is set to announce the Autumn Statement 2023 on Wednesday, 22 November, amidst a backdrop of concerns about the nation’s escalating tax burden. Despite pressure to cut taxes, Hunt has maintained a firm stance, deeming such a move “virtually impossible.” Nevertheless, here are some business areas being discussed in the financial pages this week as needing attention.
Business Rate Relief extension
Numerous business groups, including the Federation of Small Businesses (FSB), have presented their Autumn Statement wishlists. The FSB specifically urges Hunt to extend the 75% business rates relief discount for retail, hospitality, and leisure firms beyond the current cut-off date in April 2024.
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This, they argue, would serve as a crucial lifeline for thousands of small businesses grappling with rising costs. Additionally, the FSB advocates for raising the threshold for Small Business Rates Relief (SBRR) from £12,000 to at least £25,000, potentially removing over 250,000 small firms from the current business rates system.
Full Expensing untouched
Media reports suggest that Chancellor Hunt will likely reject calls to make Full Expensing permanent. The Confederation of British Industry (CBI) argues that making Full Expensing a permanent fixture could unlock substantial business investment, potentially leading to a 21% boost in business investment and a 2% increase in GDP by 2030/31.
Relief for AI
Leading technology firms, represented by the UK’s technology trade association techUK, have written to the chancellor urging support for digitalisation investment. They propose enhanced tax reliefs, including 140% support on the first £50,000 of expenditure on productivity-enhancing digital services. This recommendation aligns with PM Rishi Sunak’s recent AI summit at Bletchley Park and the broader ambition for Britain to position itself as “the next Silicon Valley.”
Fuel Duty rise
The Chancellor faces pressure to raise fuel duty, which was reduced by 5p in March 2022. Treasury officials reportedly have advised an increase of at least 2p to recover the £5 billion lost annually since the reduction, according to The Telegraph. If implemented, this would raise the duty to 55p a litre for petrol and diesel. The decision hinges on public finances, with Hunt previously stating that the continuation of the current rate freeze is contingent on financial considerations.
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By GlobalDataAgainst this backdrop, motor dealers have voiced their views on tax relief, as disclosed by Close Brothers Motor Finance’s Forecourt Foresight research. Surveying over 150 dealers, the research reveals that 61% of them are seeking assistance in coping with rising costs.
Specifically, 54% are advocating for a reduction in business rates, while 23% stress the need for enhanced infrastructure for alternative fuel vehicle (AFV) charging points. Additionally, 20% are calling for incentives to promote the stocking of AFVs. The research underscores the persisting challenge of rising costs for dealers, with 78% citing the ongoing cost-of-living crisis in the UK as their primary concern.
Lisa Watson, Director of Sales at Close Brothers Motor Finance, said: “As the whole of the UK continues to grapple with the cost-of-living crisis, it’s clear that it is continuing to have a significant impact on the motor industry.
“Costs are rising for consumers and businesses alike, meaning demand is constrained and prices have no scope to fall. A cut in business rates would provide much-needed relief for dealers still recovering from several years of uncertainty, and now trying to navigate high costs from stock prices, to taxes, through to energy bills.
“The motor industry is vital to the economy and dealers play a major role, so giving them some support should be at the front and centre of the Government’s plans.”
FLA: Autumn Statement 2023
The Finance & Leasing Association has released a 34-point statement ahead of Hunt’s budget speech, we’ve summarised some of the key FLA proposals:
- Replacement of Recovery Loan Scheme (RLS): Replacing the British Business Bank (BBB) RLS with a permanent targeted Business Finance Growth Guarantee.
- Support for British Business Bank (BBB): Continued support for BBB to ensure quick deployment of schemes and innovation in supporting UK businesses.
- Emergency Liquidity Wholesale Funding Guarantee: A new Emergency Warehouse Liquidity Finance Scheme (EWFLS) to address liquidity gaps for non-bank SME lenders during credit crises.
- Reforming Mandatory Bank Referral Scheme: Review of the Mandatory Bank Referral Scheme (MBR) to offer more flexible support for SMEs, allowing for tailored advice and alternative funding opportunities.
- Simplifying Capital Allowances Regime: A simplified capital allowances landscape, including Full Expensing, Annual Investment Allowance, a new green tax allowance, and a review of targeted first-year allowances.
- Reforming Commercial Credit Data Sharing: Easier access to credit data for businesses under the Commercial Credit Data Sharing Scheme (CCDS) to enable SMEs to benefit from insights similar to consumers.
- Opposition to Enhanced Basel Rules: Concerns over the potential negative impact of implementing Basel 3.1 standards, particularly the risk of reduced access to finance for SMEs and increased costs.
Autumn Statement 2023: ‘Businesses need conditions for growth’
