Skip to content
Northern Powerhouse European Union

Manufacturing highlights from Chancellor’s fiscal update

New Chancellor Jeremy Hunt has announced a reversal of almost all the tax measures set out in September’s mini-budget, but some policies remain ahead of a full fiscal statement on 31 October.


Tax U-turns

The cancellation of the planned rise in Corporation Tax, keeping it at 19 per cent in April 2023, will no longer be going ahead. As such, firms making more than £250,000 profit will now pay 25 per cent Corporation Tax from April next year. However, a previously announced small profits rate of Corporation Tax will be maintained, meaning less profitable businesses will not pay the full 25 per cent rate and companies with less than £50,000 profit will continue paying Corporation Tax at 19 per cent.

Elsewhere, the previously announced cut to the basic rate of income tax to 19 per cent from April 2023 and removal of the top rate of income tax have been scrapped, while a 1.25 per cent increase to dividends tax which took effect in April 2022 will now remain in place. A repeal of off-payroll working rules (also known as IR35) from April 2023 has also been cancelled.

 

Decisions continuing as planned

The government’s reversal of the 1.25 per cent rise in National Insurance Contributions from 6 November 2022 will remain in place, as will the announced cuts to Stamp Duty Land Tax.

In positive news for manufacturers, the Annual investment Allowance (AIA), which provides 100 per cent tax relief on plant and machinery investments, will remain permanently set at £1 million as planned.

The government’s announcement to set up new tax-cutting ‘Investment Zones’ in specific areas across the country is also unchanged.

 

Energy bills

The Chancellor also announced changes to the way the government will be protecting households and businesses from high energy prices beyond the next six months.

Previously, the Energy Price Guarantee for households was due to run for two years, but will now only run in its current form until April next year. The Energy Bill Relief Scheme for businesses – which was already due to end in April 2023 – remains unchanged, but the Treasury has now launched an internal review to consider how to support both households and businesses with energy bills when both schemes end.

The objective of the review is to design a “new approach” that will reduce the cost to the taxpayer while ensuring support for those most in need.

In his statement to the House of Commons on 17 October, the Chancellor underlined that any support for businesses beyond April 2023 will be targeted to those “most affected” and that the new approach will “better incentivise energy efficiency”.

 

The Hub has launched a series of weekly webinars as part of its #HereForBusiness campaign to help Greater Manchester businesses navigate these uncertain times, provide specialist support and signpost to relevant partner programmes. To find out more, visit businessgrowthhub.com/here-for-business

Share this post