Spring Budget 2023: a formula for business growth, or just underwhelming?

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Wednesday, 15th March, saw this year’s Spring Budget presented to Parliament by Chancellor of the Exchequer Jeremy Hunt. Unsurprisingly, the Second Lord of the Treasury was keen to talk up the UK as being on a “lasting path to growth” after the tumult of the past year – including that associated with last autumn’s now-notorious “mini-budget”.

That particular “budget” – or “The Growth Plan”, to give its official name at the time – had been delivered by Mr Hunt’s immediate predecessor Kwasi Kwarteng, under a Conservative Government that looked very different under then-Prime Minister Liz Truss.

A lot, of course, has changed since then. With Rishi Sunak now in Number 10 and Mr Hunt heading up the Treasury, there has been a much less frenetic mood around the latest Spring Budget, which – unlike the “mini-budget” – is actually an official UK Government budget.

Pointedly, the manner in which the latest Budget has been presented has also put much emphasis on the ‘G-word’, with the Treasury headlining that the Chancellor had unveiled a “Budget for growth”.

But has that been borne out in reality, with a complement of business-friendly measures – or have the Government’s spending plans been somewhat oversold?

Childcare, R&D and energy captured attention, but some business owners will be happier than others

One of the most trailed announcements in the Budget was the extension of the Energy Price Guarantee (EPG) for households for another three months until the end of June 2023. However, there was no mention of a similar extension for the equivalent Energy Bill Relief Scheme (EBRS) for small and medium-sized enterprises, beyond its presently scheduled expiry on 31st March 2023.

The Spring Budget also saw the Chancellor throw the veil off a major expansion in childcare support, as the Government sought to encourage more parents to return to the workplace.

So, what about the measures that were of more direct benefit to businesses? Well, it was confirmed that loss-making “research and development (R&D) intensive” small and medium-sized enterprises (SMEs) – those that devote 40% of total expenditure to qualifying R&D – will be able to access an enhanced R&D tax credit of 27%. Eligible firms will be able to claim a 14.5% cash repayment.

In fact, it seemed that this Budget was a particularly encouraging one in general for small business owners working in science and technology. Not only were such firms given enhanced R&D tax credits for cutting-edge research in fintech and artificial intelligence (AI), but the creation of a dozen investment zones up and down the UK was also a move very much targeting the technology sector.

Otherwise, small business owners around the country could be forgiven for feeling that the Chancellor had largely sidestepped their priorities and needs. Along with the glaring absence of an extension to the EBRS, there was no mention of reform to business rates, at a time when some observers had expressed a wish for business rates to be abolished altogether.

Indeed, while the Treasury said that its measures amounted to a “£27 billion tax cut for business”, Martin McTeague – chairman of the Federation of Small Businesses (FSB) – said there was a “glaring” lack of Government support for “small firms in critical areas”.

He commented: “Budgets are about tough choices, and with today’s billions being allocated to big businesses and households, 5.5 million small businesses and the 16 million people who work for them will be wondering why the choice has been made to overlook them”.

Whether the Budget spelt good or bad news for your business, we can help

Although the 2023 Spring Budget might not exactly go down as one of the most talked-about UK Government budgets (whether official or unofficial) in the years to come, the signs are that it will be a highly consequential one for many small firms.

Even just looking at the situation around energy costs, the FSB had warned that more than 350,000 small businesses faced having to downsize, restructure, or close completely in the event of their energy bills going back to the higher rates from April. With the EBRS apparently not set to carry on beyond the end of March, many business owners will be dreading the size of their bills in the months ahead.

To end this summary on a positive note, however, it is important to emphasise that – whatever your verdict was on the Spring Budget as a small business owner – help is available.

Whether you are on the lookout for specialised knowhow and assistance in relation to accounting, payroll, or research and development tax relief in Newton Abbot, Plymouth or Wellington – to cite just some of our areas of expertise – you are welcome to get in touch with the TS Partners team. Why not enquire today to our office that is closest to your own business?