Autumn Statement 2023 – SME package factsheet

A summary of measures to supercharge small and medium sized enterprises.

To create the conditions for innovative and dynamic businesses to thrive, at Autumn Statement we are setting out an ambitious package of measures to supercharge small and medium sized enterprises as the engine room of the economy. 

Prompt Payments 

Overall payment times for some SMEs have reduced from 81 days in 2010 to 36 days in 2020/21, but 40% of invoices are still not being paid according to the agreed terms. Many SMEs struggle or do not survive as a result. To tackle this issue government is: 

• Showing further leadership on this issue by introducing a condition whereby firms bidding for large central government contracts need to demonstrate they pay their own suppliers within an average of 55 days from April 2024, with an aim to tighten this to 45 days from April 2025 and 30 days in the coming years.
• This builds on the Procurement Act we have passed which means that the 30-day payment terms which are already set for public sector contracts will be automatically implied throughout the sub-contract supply chain. 
• Publishing its Payment & Cash Flow Report today, with measures including broadening the powers of the Small Business Commissioner enabling it to undertake investigations and publish reports on the basis of anonymous intelligence.   

Expansion of Made Smarter Adoption programme 

To date the Made Smarter Adoption programme has reached over 3,100 manufacturing SMEs. 492 tech projects have been funded, leveraging in £19.6 million of private investment. Over 900 businesses have been provided with digital roadmaps and over 200 SME business leaders have undertaken leadership and management training. 

Data on impacts of the programme in its existing regions is promising, and we want manufacturing SMEs across the country to be able to benefit. 

We will be extending and expanding the highly successful Made Smarter Adoption programme, committing up to £16 million in 2025-26 to expand to all regions and SME manufacturing businesses in England before working with the Devolved Administrations to explore expanding the programme across the UK from 2026-27. 

The government will work with the Devolved Administrations to explore making the programme UK-wide from 2026-27.

Digital Adoption Taskforce 

DSIT will work with industry to create a taskforce to rapidly identify how best to support SMEs to adopt digital technology to improve their productivity.

Growth Hubs 

We are committing to continue funding in 2024-25 for Growth Hubs - the network of 37 local Hubs around England that offer free business support and advice. 

 A recent independent evaluation of Growth Hubs found that: 

• Growth Hubs directly support over 140,000 businesses per year, with the average firm receiving over 1 hour of support in 2022-23.  
• Businesses who engaged with Growth Hubs have better business outcomes than businesses who don’t – they are more likely to seek and secure private finance, experience improved turnover, and strong growth in employment. 

Help to Grow 

We will continue funding for the Help to Grow Management programme past 2024/25 which helps SME business leaders increase productivity, seize investment opportunities and grow their business. The Management programme has already: 

• Helped 5,300 business leaders to date - 9 out of 10 participants were satisfied 
• Addressed skills gap issues. Just 28% of participants felt they had the skills to manage their employees before the programme. This increased to 75% post-completion 

UK Export Finance (UKEF)

UKEF is the UK’s leading export credit agency that provides a range of financial products to help exporters win contracts, fulfil orders and get paid. For SMEs, it provides support for trading overseas, including working capital loan guarantees, export insurance and contract bond support. 84% of companies support by UKEF in 2022/23 were SMEs. We are strengthening the suite of UKEF support available for SMEs by: 

• Implementing feedback from market research to address the export financing needs of SMEs with a turnover of less than £10 million 
• Creating a UKEF SME directorate to ensure the department has the right level of focus, senior oversight and accountability in this space 

UKEF are a key part of the Government’s 12-point Export Strategy which includes a target to reach £1 trillion in UK exports per year by 2030. 

Future Fund: Breakthrough 

The Government has announced an extension to the Future Fund: Breakthrough investment programme of at least £50 million from 2024/25, helping the UK’s most R&D intensive companies to scale up.

This will benefit R&D-intensive companies looking for growth funding 

Future Fund: Breakthrough invests directly into UK-based companies working in R&D-intensive areas, such as deep tech & life sciences.

The programme is designed to increase the supply of growth stage venture capital to R&D intensive companies and was launched with £375 million at March Budget 2021. 

Tax measures that affect SMEs: 

Expanding the Cash Basis 

The cash basis is a simplified method for calculating small business profits.  

• By measuring money received and paid out, and removing complex tax and accounting rules, the cash basis makes it much easier for businesses to understand how their taxable profits have been calculated, reducing error and the likelihood any unexpected tax bills, and in many cases removing the need for a business to pay for an accountant. 1.2 million businesses currently benefit from the cash basis and its simplicity. 
• By making the link between money received and tax bills clearer and simpler, the cash basis gives self-employed people more time to focus on growth and running their business, rather than administration and tax obligations. 
• The government will be making changes to widen the range of businesses that are able to use the regime. The changes simplify the basis further than originally proposed in the consultation; completely removing limits on the size of business able to use the basis, interest deductions, and loss relief available under the cash basis. The original proposals were to relax these restrictions. 

Business rates 

The government has announced a business rates support package worth £4.3 billion over the next 5 years to support businesses and the high street: 

• The small business multiplier (a tax rate used to calculate bills for non-domestic properties) will be frozen at 49.9p for a fourth consecutive year. This freeze will protect over a million ratepayers from the impacts of inflation, whose bills will be 6.67% lower compared to no freeze (before any reliefs are applied). 
• The standard multiplier (paid by properties with a rateable value of £51,000 or more) will be uprated by September’s CPI next April (6.7%). This will mean an increase from 51.2p to 54.6p. 
• • Many larger retailers benefited from the 2023 revaluation as rateable values for their properties decreased by 10%.
  • The £13.6 billion package of support in last year’s Autumn Statement further decreased total bills for the retail sector by 20% - superstores saw a 15% reduction in their bills and the largest shops saw a total fall of 35%.
• Retail, Hospitality and Leisure (RHL) relief will be extended for a fifth year to 2024-5. This means that around 230,000 retail, hospitality and leisure properties will receive 75% relief, up to a cap of £110,000 per business, on their business rates bills for 2024-25. This is a tax cut worth nearly £2.4 billion, delivering support to businesses such as cafes, pubs and high street shops. 

Local Authorities in England will be fully compensated for the loss of income and will receive new burdens funding for administrative and IT costs. 

Tax relief for R&D intensive SMEs 

The government is legislating the enhanced tax relief for R&D intensive SMEs that was announced at Spring Budget 2024. Companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition for R&D intensity. 

• For every £100 spent on R&D, eligible SMEs will receive a cash value of around £27. This is compared to £16.20 for non-R&D intensive loss makers in the merged scheme. 
• The intensity threshold is being reduced, meaning loss-making SMEs with a qualifying R&D expenditure of 30% rather than 40% will now qualify for the more generous support. This will provide £65 million of support to around 5,000 extra SMEs. 
• A one year grace period will be introduced, which means that companies who dip under the 30% threshold will continue to receive relief for one year. This will provide certainty to businesses and is worth an extra £25 million by the end of the scorecard. 
• In total, these changes are worth an additional £90 million p.a. at the end of the forecast period. 

The £1 million Annual Investment Allowance, helping companies invest for less

The £1 million Annual Investment Allowance allows SMEs to invest for less by allowing them to deduct 100% of the cost of main rate plant and machinery from their profits before tax, up the value of £1 million.

• Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.
• The £1 million Annual Investment Allowance covers 99% of businesses.
• The AIA has been set permanently at £1 million since Autumn Statement 2022. It exists in addition to permanent full expensing, which predominantly helps larger businesses, and is the biggest permanent business tax cut in modern British history – worth over £50 billion over the next five years.
• The autumn statement is expected to help unlock growth and productivity by boosting business investment by £20 billion a year and getting thousands more people into work.