Autumn Statement 2023 Highlights and the Impact on the Beauty Industry
The Autumn Statement of 2023, as delineated by the Chancellor, has introduced a series of measures impacting the UK's business landscape, including the beauty industry.
The Autumn Statement underscored the Government's emphasis on incentives to stimulate capital investment and sustain a competitive UK tax environment. However, it also entails potential tax increases that businesses need to plan for, alongside possible reliefs. One significant announcement was the permanence of the ‘full expensing’ capital allowances regime, originally set to expire in 2026. This policy grants upfront tax relief in the year of expenditure, offering a cash tax saving of 25% on qualifying expenses on plant and machinery, a boon for many businesses.
On the downside, the full expensing capital allowances regime overlooks incentives for innovation and achieving net-zero targets, a notable gap given the growing emphasis on sustainability. The plastic packaging tax, a significant cost for many companies, will increase from April 2024, underscoring the government's focus on environmental issues.
The merged scheme for R&D tax reliefs, combining the current two regimes, will benefit some but may reduce relief for many small and medium enterprises (SMEs). The scheme, however, retains a more favorable regime for R&D-intensive SMEs.
In a relief to small businesses, the small business rates multiplier at 49.9p will remain frozen for the 2024/25 rate year. Additionally, the retail hospitality and leisure relief (RHL relief) has been extended for another year at 75%, capped at £110,000 per business. This measure is particularly beneficial for the beauty industry, which predominantly consists of small and micro businesses.
Victoria Brownlie, Chief Policy Officer at the British Beauty Council, commented on the Autumn Statement saying ‘We’re delighted that the Chancellor has responded to our calls for a continuation of the 75% Retail business rates discount. Along with cuts to National Insurance, this will give very welcome relief to businesses struggling to cover overheads. Sector recovery has been slow and steady since the Spring and many businesses are still battling to clear Covid debts.
With £50m allocated to apprenticeships in key growth sectors, we look forward to hearing more about how the hair & beauty sector will be supported. Employer incentives to support education and training particularly apprenticeships are desperately needed to ensure the future talent pipeline to our vibrant, creative and innovative sector. Given rising wage costs in the spring, sector employers, mostly small and micro businesses, won’t be rushing to take on new staff without additional support’.
While the continuation of the 75% Retail business rates discount and cuts to National Insurance, as lauded by NHBF's Caroline Larissey, offer some relief, the industry continues to face uphill battles in dealing with rising overheads, energy costs, and the need for more support for sector recovery and talent development. The British Beauty Council's efforts in lobbying for business support and fostering industry growth and talent development will be crucial in navigating these challenges and sustaining the UK's position as a key player in the global beauty market.