Chancellor Jeremy Hunt's budget piles on pain for businesses

Jeremy Hunt said that everyone would feel the pain in his Economic Statement; that is certainly true of businesses, and SMEs in particular.

Given that they are the real engine of growth in the UK economy, he may find that attacking them on every front will not prove popular in the business community.

Going into this Autumn Statement, small business owners had already been targeted with a significant increase in the rate of corporation tax from April next year and an across-the-board 1.25pc uplift in tax on dividends.

Yesterday’s statement piled on the pain.

Perhaps it wasn’t surprising that the chancellor chose not to extend the ‘Super-Deduction’ beyond next March (the Annual Investment Allowance remains in place, extended to £1m), but the reduction in small business R&D tax relief announced in the statement effectively reduces tax relief on R&D for small firms from 230pc to 186pc.

The 9.7pc increase in the National Living Wage will add cost for businesses, not just at the lower end, but with a knock-on effect right across the wage structure.

Add to that the freezing of the employer National Insurance threshold, and employing people is about to get much more expensive.

Meanwhile, uncertainty about energy costs continues.

The chancellor acknowledged that bills are likely to remain high throughout 2023 by extending the residential energy cap for another year.

But businesses received no such relief, and will have to wait until the new year before they learn what – if any – further support they will receive after March. For those renewing energy contracts right now, that lack of certainty hardly helps.

Chancellor Jeremy Hunt has delivered his autumn statement (Image: PA)

Meanwhile, business rate payers are facing big rises following the announcement that business premises revaluations will go ahead as planned next year.

There will be some transitional relief, but this is sure to be another rising cost for businesses.

Better news for those in the retail, hospitality and leisure sectors, who will see relief extended for another 12 months.

The only silver lining is what the chancellor didn’t do: no VAT increase, no rise in National Insurance rates, and no rise to headline income tax rates.

But this will give small comfort to hard-pressed small businesses.

What is clear from the statement is that the chancellor has accepted that high levels of inflation are here to stay for at least another 12 months, and there is little he can do about it.

Sadly, it seems that businesses will have to resign themselves to a tough few months ahead.