2023: What the year has in store for SMEs
The new year brings a mix of uncertainty and opportunity for SMEs as they look to navigate a struggling economy, an impending recession and changes to tax and incentives following Jeremy Hunt’s Autumn Statement. It’s safe to say 2022 was a turbulent 12 months. But rest assured, whatever 2023 brings, we’re here to help you plan, prepare and navigate the year ahead. To help, we’re answering your questions about what the year holds.
When will the Spring Budget be?
There will be a lot of eyes on the Spring Budget. If it’s anything like the last two, expect a lot of twists and turns. It was announced before Christmas that it will now be held on the 15th March.
Our traditional Spring Budget breakfast will take place one week later on Tuesday 21st March. This is where our tax team will cover the ins-and-outs of Jeremy Hunt’s announcements – and is not to be missed. You can register for the event here.
What changes affect SMEs from April 2023?
Following the announcements in the Autumn Statement, here’s a recap of the major changes coming into effect from April:
- Capital Gains Tax allowance is reducing from £12,300 to £6,000 from April 2023
- The main rate of corporation tax will increase from 19% to 25% in April 2023
- The dividend tax allowance will reduce next tax year from £2,000 to £1,000
- The Energy Bill Relief Scheme will end as planned
- The additional 45% income tax band will be abolished for income above £150,000 meaning from April 2023 all annual income above £50,270 will be taxed at 40%
- The R&D deduction rate for the scheme will be cut from 100% to 86%. The credit rate will also be cut from 14.5% to 10%, and the rate of the separate R&D expenditure credit (RDEC) will be increased from 13% to 20%
- The national living wage will rise from £9.50 an hour to £10.42 an hour from April 2023
- The business rates revaluation comes into effect on 1 April 2023
It is important to keep these dates in mind in order to ensure that you are planning ahead, meeting your tax obligations and taking advantage of any tax allowances or reliefs that you are entitled to. If you’re unsure, or want to clarify anything, reach out to a member of our team.
Will there be a recession in 2023?
After speaking with many of you, rising costs and bills are major concerns for SMEs in 2023. It’s clear that the UK economy’s downturn and high inflation, coupled with rising interest rates, are causing a negative impact on consumer spending and businesses. But will there be a recession? Our Accounts partner, Mark Rubinson, had this to say:
“We were fortunate to recently be joined at one of our events by Rob Elder, an Economist with the Bank of England, where we reviewed the UK economy. It was interesting to see how confident the BoE are that the UK will bring inflation back under control and, by the end of year, inflation should be lower. In addition, it appears that the recession will be shallower than was first envisaged and that base rates will peak at about 4.25% even though they had been predicted to go much higher. Thereafter interest rates should decline once inflation moves back towards the 2% per annum target and this should mean that the UK will go into 2024 in much better shape”.
What does 2023 look like for the accounting industry?
As a progressive accountancy firm who embraces technology, we’re excited about what 2023 can bring and think the appetite for tech will continue to accelerate. In particular:
- New technologies like AI (Artificial Intelligence) can make laborious tasks quicker through automation
- Blockchain technology can make the accounting and finance industry more secure
- Big data will grow in importance as accountants are called upon to provide insights and analysis on operating efficiencies
Our experts are raring to embrace these trends and technologies in order to take advantage of any efficiency gains.
We’re also excited by the popularity of cloud computing increasing, and the roll out of Making Tax Digital (despite tax returns being delayed until 2026). We think digitalisation will endure as a trend for the coming year. And we’re proud to be at the forefront of that.
Is outsourcing on the rise?
Throughout 2022 we saw a rise in outsourcing in the world of accounting. With ever-changing regulations, tax laws, and compliance, companies are relying on accounting firms’ expertise to help navigate these and reduce their risk of potential penalties.
SMEs tell us they love the value and insight it gives their company, but also the flexibility to scale up or down as needed to meet the changing needs of the business.
It’s only natural that as businesses become more difficult to manage in economically-turbulent times, we’ll see an increase in companies turning to outsourcing. By freeing up their own time and resources, they can have their own team focus solely on their core operations and growth.
What next?
If you’d like more information on any of the points in this article, or need more information on how it will affect you or your business, then please contact us.
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