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Autumn statement: business rates explained

There were several measures aimed at the self-employed and business owners in Chancellor Jeremy Hunt’s Autumn Statement. Find out how the business rates relief could affect you.

| 2 min read

In a widely expected move, the Chancellor is to make the so-called ‘full expensing’ measure permanent. This allows companies to receive a 100% first-year tax deduction for expenditure on qualifying plant or machinery, reducing the cost of that plant or machinery by 25% in that year.

The Chancellor believes this measure alone will help boost business investment by 1% at a cost to the Treasury of £11bn. That’s almost a third of the total amount of money (£27bn) the Chancellor could give away thanks to higher tax receipts and lower government borrowing.

The Chancellor also announced a business rates relief package worth £4.3bn over the next five years. The intention here is to support high streets and protect small businesses from the burden of business rates. There will be a rollover of the 75% retail, hospitality, and leisure relief (affecting 230,000 properties) and there will be a freeze of the small business multiplier.

The prospect of establishing a new growth fund within the British Business Bank was also raised by Hunt, which he said would help unlock an extra £75bn of financing for high growth companies by 2030. This will be available to pension funds to invest in, as part of his broader pensions reforms.

He also announced an extension to the sunset clause on Enterprise Investment Schemes and Venture Capital Trusts. Both schemes provide investors with significant tax reliefs for funding early-stage companies and are an important source of funding for the start-up and scale-up ecosystem.

What about the changes to National Insurance?

As well as a two-percentage-point cut in employee National Insurance contributions (NICs), measures were announced for the self-employed – although these won’t be introduced until April next year.

Class 2 NICs, which is a flat rate of £3.45 paid by self-employed people earning more than £12,570, is to be abolished from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate. Class 4 NICs, which are payable on all self-employed earnings between £12,570 and £50,270 is to fall by 1% from 9% to 8% from April 2024. This will save self-employed workers an average of £350 a year from next April.

Looking for more on Jeremy Hunt’s speech? See the Autumn Statement summary.

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