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Table of Contents
UK Budget 2023 highlights: Key Measures Affecting Businesses and Individuals
Last week, the Chancellor of the Exchequer, Jeremy Hunt, unveiled his first Spring budget 2023 highlights with a focus on managing inflation and government debt, encouraging workforce re-entry, and promoting business investment.
Here are some of the key measures announced that will impact businesses and individuals across the UK:
- From April 1, 2023, the main rate of corporation tax will increase from 19% to 25% for taxable profits over £250,000. Companies with profits below £50,000 will pay at 19%, while those with profits between £50,000 and £250,000 will pay at an effective marginal rate between 19% and 25%.
- Research and Development Expenditure Credit (RDEC) changes include an increase from 13% to 20% for non-SME companies, while SMEs will see a reduction from 230% to 186% in R&D tax relief enhancement.
- The Annual Investment Allowance (AIA) has been permanently set at £1million for unincorporated businesses and companies investing in qualifying plant and machinery. The super-deduction, which provides enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on March 31, 2023.
- Companies can fully deduct investment in new qualifying plant and machinery from April 1, 2023, to lower taxable profits, and a 50% first year allowance will be available for integral features.
- The Company Share Option Plan (CSOP) employee share options limit will increase from £30,000 to £60,000 from April 6, 2023. Moreover, restrictions on the types of shares eligible for CSOP options will be lifted.
- The Government will establish 12 ‘Investment Zones’ across the UK, with at least one each in Scotland, Northern Ireland, and Wales.
- The Seed Enterprise Investment Scheme will see the amount of investment companies can raise increase from £150,000 to £250,000, with a gross asset limit increase from £200,000 to £350,000. The annual investor limit will double to £200,000. These changes will take effect from April 6, 2023, to support start-up companies.
- Fuel duty freeze remains in place for another year.
- Alcohol taxes will rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs.
- Pension tax reform includes an increase in the pensions annual tax-free allowance from £40,000 to £60,000, and the abolition of the Lifetime Allowance to encourage highly skilled individuals to continue working for longer.
- The Energy Price Guarantee that caps how much suppliers can charge per unit of energy used will remain in place until June 2023.
- Starting from April 2024, one and two-year-olds in England will receive 30 hours of free childcare to help parents return to work, eventually covering all children from the age of nine months. This will be rolled out in stages.
Alongside the many mini-budgets and statements made towards the end of 2022, this budget 2023 highlights brings change, which can be good, bad, or to be determined with time. What is clear is that 2023 is a year of opportunity, and we are here to work alongside you and help you grow!
For more information, kindly refer to our comprehensive UK Budget Summary published last week. Moreover, do not hesitate book a free meeting with us if you require any assistance regarding the changes announced in the budget.
New UK Version of GDPR
The UK government has introduced new data laws aimed at reducing paperwork for businesses and minimizing cookie pop-ups. The Data Protection and Digital Information Bill was initially proposed in the summer of 2022 and was paused in September to allow for a co-design process with business leaders and data experts. This move aimed to ensure that the new laws build on the UK’s high standards for data protection and privacy while also ensuring data adequacy, moving away from the European Union’s GDPR’s ‘one-size-fits-all’ approach.
Data is essential in fueling economic growth in all areas of society, from unlocking medical breakthroughs to helping people travel, manage their finances and shop online. It is also vital for the development and use of innovative technologies such as artificial intelligence. Data-driven trade generated 85% of the UK’s total service exports and contributed an estimated £259 billion to the economy in 2021.
The bill aims to:
- Introduce a clear, simple, and business-friendly framework that will not be difficult or expensive to implement, drawing from the best elements of GDPR and providing businesses with more flexibility to comply with the new data laws.
- Ensure that the new regime maintains data adequacy with the EU and international confidence in the UK’s comprehensive data protection standards.
- Reduce the amount of paperwork required for organizations to demonstrate compliance.
- Support international trade without creating additional costs for businesses that are already compliant with existing data regulations.
- Provide organizations with greater confidence in processing personal data without consent.
- Increase public and business confidence in AI technologies by clarifying the circumstances in which robust safeguards apply to automated decision-making. See: British Businesses to Save Billions Under New UK Version of GDPR – GOV.UK (www.gov.uk)
Building Business Resilience
The Guide to Building Business Resilience by the British Business Bank offers practical and impartial support to smaller businesses to enhance their resilience, manage their costs and increase their long-term profitability.
The guide covers various topics, ranging from energy efficiency to investing in technology to make businesses more innovative and resilient.
Other topics include:
- Foundations for growth
- Managing business costs
- Securing funds
- Controlling debt
- Focusing on customers
- Optimising the supply chain, and
- Controlling staff overheads.
By following the guidance provided in this guide, businesses can strengthen their resilience and increase their chances of success in the long run. It provides actionable information and support that businesses of all sizes can utilise to manage their finances, improve efficiency, and stay competitive in their respective industries.
Government and Bank of England Facilitate Sale of Silicon Valley Bank UK
Last week, HSBC acquired Silicon Valley Bank (UK) Ltd (SVB UK) for a nominal £1. HSBC, headquartered in London, is the largest bank in Europe and one of the world’s largest financial services institutions, with 39 million customers worldwide. Customers of SVB UK can continue to access their deposits and banking services as usual.
The Bank of England, in consultation with the Treasury, facilitated this transaction using powers granted by the Banking Act 2009. This deal utilises post-crisis banking reforms that introduced measures to safely manage the failure of banks.
Implications of the recent global bank stocks slump for all businesses
After the collapse of Silicon Valley and Signature banks, bank shares in Asia and Europe have slumped, despite reassurances from Joe Biden. The volatility has led to speculation that the Federal Reserve will pause plans to raise interest rates, designed to halt inflation.
It is important to note that, post-2008, there was a focus on reforming banks considered “too big to fail,” and the issues right now mainly focus on medium to smaller-sized banks. The failure of Silicon Valley and Signature banks is a clear message in that they were mainly concentrated in one sector, and they came under pressure as the rise in interest rates affected asset values.
Understanding who your most valuable customers are helps focus your efforts to increase sales, but diversification is also important. Even if you have many customers, it’s risky if they are too similar and could be affected by a similar change in business or the market. For example, if your three largest customers are based in the US, an unfavourable change in the exchange rate could see them all drastically reduce their orders.
If you run a business, the message is clear: “Diversify your customer base.”
Here are some thoughts:
- Increase your market share by widening your customer base in your existing markets.
- Use information to understand your competitors and take advantage of any gaps in the market.
- Grow through product and service development.
- Grow through strategic partnering with other businesses.
- Grow through international trade.
The key question is: “Do you have a marketing plan?”
Successful businesses all have two things in common: a thorough understanding of customer needs and a total dedication to their customers.
The logic is that you gather information about your business and get an insight into the way customers and prospective customers think and make “buy” decisions. So, take a day out to work on your marketing plan and set some targets.
By the end, you should be in a position to:
- Have gathered information about existing and potential customers’ needs and wants.
- Have facilitated a discussion about the marketing actions the company should take.
- Know the unique selling points that your business has and how to take advantage of these.
- Understand how to differentiate the business from competitors.
- Produce a marketing plan.
A marketing plan sets out how you are going to put your business strategy into practice. The marketing plan ensures that everyone in the business knows what you are trying to do and what they need to do to make it happen.
Faraday Battery Challenge
Innovate UK, which is a part of UK Research and Innovation, is partnering with the Faraday Battery Challenge to invest up to £1.5 million in innovation scale-up projects.
The objectives of this competition are to:
- Support small and medium-sized enterprises (SMEs) in their research and development efforts for scaling up battery technologies in the UK.
- Assist SMEs in accessing the UK Battery Industrialisation Centre (UKBIC) and showcasing their technologies to potential customers at suitable scales.
- Increase engagement with UKBIC.
- Transition UK battery innovations from technological potential to commercial capability.
- Develop and secure material and manufacturing supply chains for battery technologies within the UK.
The deadline for the competition is 11am on 4 April 2023.
The King’s Awards for Enterprise
Businesses will have the opportunity to apply for the UK’s most prestigious business award when applications open in May.
Following the Accession of King Charles III, The Queen’s Award for Enterprise has been renamed to The King’s Award for Enterprise.
The King’s Awards for Enterprise celebrate and encourage the exceptional achievements of UK businesses in the areas of:
- international trade
- sustainable development
- promoting opportunity through social mobility
Businesses of all sizes and sectors can apply for the awards, and it is free to enter. You can also apply for more than one award.
To be eligible, your organisation must:
- be located in the UK (including the Channel Islands and the Isle of Man);
- have a good compliance record with HM Revenue and Customs (HMRC), such as paying the right amount of tax on time;
- be a self-contained enterprise that markets its own products or services and is under its own management;
- have at least two full-time UK employees or part-time equivalents;
- demonstrate strong corporate social responsibility.
Your organisation can be a business or a non-profit organisation. Each award category has additional entry criteria. The awards are valid for five years. Previous winners have reported benefiting from worldwide recognition, increased commercial value, excellent marketing opportunities and press coverage, and a boost to staff morale.