We could be facing a long, cold winter
Over the last few months our members have been preparing for what looked like a difficult period in which to do business, but there were a lot of unknowns. Whatever you think about it, the Chancellor’s autumn statement, a budget by any other name, at least provided some certainty so people have a solid foundation on which to plan. Here is a brief summary of some of the main points which I hope will be of interest to local businesses.
One of Jeremy Hunt’s main strategies was to make use of the freezing of thresholds, so that gradually more people and businesses will be scooped up over time. For example, currently companies only have to register for VAT if their annual turnover is above £85,000. You might have expected that figure to gradually rise, but that won’t change until 2026, so it’s likely growing businesses will pass that figure over the next four years and so they will need to become VAT registered.
Similarly, personal income tax allowances had been frozen at £12,570 until 2026, now it’s to be frozen all the way through to 2028 so it’s likely that as wages rise more people will start to pay tax. At the same time, the national living wage will increase, so adult employees will need to be paid a minimum of £10.42 an hour. The Treasury says this will give over two million people a pay rise and there are plans to continue to increase it, but of course they’ll be paying more in tax and businesses will face increasing costs.
Local authorities had been restricted to 2.99% Council Tax rises without holding a referendum but they are now being allowed to increase bills by up to 4.99% and it’s likely virtually all Councils will do that.
Over the last few years quite a lot of people were encouraged to form Limited Companies and partly pay themselves through dividends, the first £2,000 of which was tax free. That figure is to be halved next year and halved again the year after, so by 2024/5 it will be down to only £500.
Relief on energy bills for businesses will stay in place until April but then the scheme will be reviewed and there’s a suggestion that after that it will be a question of providing targeted support for the business deemed most vulnerable.
There’s not much easy reading here for local businesses and it looks like a cold winter ahead, but our members are resilient and creative and with the support of customers from the local community they can get through what will be a challenging period.
If you would like to find out more about Chew Valley Chamber of Commerce have a look at our website: www.chewvalleychamber.co.uk