The Spring Budget 2023 brought forth a series of announcements that will have a significant impact on small businesses and the self-employed. As the economic landscape continues to evolve, it is crucial for entrepreneurs and individuals in these sectors to stay informed about the latest developments. In this blog post, we will highlight the key points from the Spring Budget 2023 that directly affect small businesses and the self-employed, providing valuable insights to help navigate the changing business environment.

1. Corporation Tax

The Chancellor announced changes to the corporation tax rates. The main rate will increase from 19% to 23% in April 2023, affecting larger businesses with profits exceeding £250,000. However, the small profits rate of 19% will remain unchanged for businesses with profits below this threshold, providing some relief for small enterprises.

Understanding Making Tax Digital for Corporation Tax

2. National Insurance Contributions (NICs)

To support the self-employed, the government has announced changes to the Class 2 and Class 4 NICs thresholds. From April 2023, the Class 2 NICs threshold will be increased from £6,515 to £7,000 per year, reducing the financial burden on low-income self-employed individuals. Additionally, the Class 4 NICs threshold will rise from £9,568 to £10,000 per year, benefiting self-employed individuals earning above the lower threshold.

3. VAT Threshold

The government has decided to maintain the VAT threshold at £85,000 for at least the next two years. This means that small businesses will not be required to register for VAT unless their annual turnover exceeds this threshold. This decision aims to alleviate administrative burdens for small enterprises and provide them with greater flexibility to grow.

Everything Your Small Business Needs to Know About Registering and Paying VAT

4. Apprenticeship Levy

In an effort to support small businesses in hiring and training apprentices, the Chancellor announced changes to the Apprenticeship Levy. From April 2023, the government will reduce the co-investment rate for non-levy paying employers from 5% to 2.5%, making it more affordable for small businesses to invest in apprenticeships and develop their workforce.

Spring budget relief

5. Business Rates

Recognising the challenges faced by businesses due to the pandemic, the government has extended the current business rates holiday for retail, hospitality, and leisure sectors in England for an additional three months until the end of June 2023. This extension aims to provide further relief and support to these sectors as they recover from the economic impact of the pandemic.

6. Research and Development (R&D) Tax Relief

To encourage innovation and research, the government has announced an increase in the rate of R&D tax relief for small and medium-sized enterprises (SMEs). From April 2023, the SME R&D tax relief rate will rise from 13% to 15%, providing SMEs with additional financial incentives to invest in R&D activities and drive innovation.

The Spring Budget 2023 has introduced several measures aimed at supporting small businesses and the self-employed during these challenging times. From changes to corporation tax rates to adjustments in NICs thresholds and business rates relief, these initiatives aim to alleviate financial burdens and foster an environment conducive to growth and innovation. It is essential for small business owners and self-employed individuals to stay updated with these changes and seek professional advice to ensure compliance and maximise the benefits available to them in the evolving business landscape.

Neil Smith Accountancy is your perfect partner in business and strategy. We have helped many Essex small businesses over our more than fifteen years of service in the area. Contact us today to discuss your needs, or arrange a free consultation. We can make sure your business stays tax-compliant and -efficient, and our experience in the sector enables us to offer effective business advice. Neil Smith Accountancy can lead your small business to success!

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