Three IPs walk into a bar. This is true; the bar in question is The Fitzgerald on Stevenson Square in Manchester and they met up after work yesterday to discuss the ramifications of Jeremy Hunt's spring budget. They just happened to meet a nun and a horse with a long face there.
One of the things Mr Hunt told us all is that we can no longer expect the UK to go into recession in 2023, which is a little annoying as the NTI newsroom has just been recession-proofed and we have bubble wrap-lined all walls and had electrical sockets moved out of harm's way. (Has Jeremy chatted to Andrew Bailey of our illustrious Bank of England about this? Not NTI's recession-proofing, the lack of a recession for the UK.)
Responding to the collapse of SVB over the weekend, and to calm markets, Mr Hunt said that the Autumn Statement 2023 (which we are already looking forward to) would include a plan "to build a more diverse financing system" for high growth firms, and "unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list and complete our response to the challenges created by the US Inflation Reduction Act." Of course, no-one knows what any of that means, but it sounds jolly important and we look forward to having it explained to us should we get to the autumn.
We heard from the Insolvency Service on Tuesday that CVLs and other corporate insolvency interventions are at their highest for four years, so many of our clients will be small businesses knackered from clinging to the edge of a crumbling cliff. Mr Hunt had nothing but good news for such folk, and you should pass this onto them. There was particularly good news for small business owners working in science and technology, with enhanced R&D tax credits for cutting-edge research in artificial intelligence and fintech, as well as the creation of a dozen investment zones around the country, again aimed at the technology sector.
On the flip side there was no mention of extending the Energy Bill Relief Scheme for SMEs, despite the Federation of Small Businesses warning that over 350,000 small businesses stand to downsize, restructure or close entirely if their energy bills revert to the higher rates in April. Neither was there any mention of business rates reform, despite calls for business rates to be abolished in their entirety. Given that business rates raise over £25 billion a year for local services, wholesale abandonment wasn’t really an option.
One of the least worries about the types of company referred to above is the taxation on something caslled 'profit'. However (as we all know) Corporation Tax will increase from 19 per cent to 25 per cent from next month. The full force of the tax rise will hit businesses with profits of more than £250,000. Companies with profits of between £50,000 and £250,000 will get some relief. For small businesses making profits of less than £50,000 there will be no change.
Mr Hunt also announced that, from 1 April, an increased rate for repayable tax credit for loss-making R&D intensive small and medium-sized enterprises of 14.5 per cent (rather than the existing 10 per cent) will apply.
Also, from 6 April the amount which a company can raise through the Seed Enterprise Investment Scheme will increase from £150,000 to £250,000. The base of the scheme will also be broadened with the gross asset limit increased from £200,000 to £350,000 and the age limit on a qualifying trade extended from two to three years.