On 22 November the Chancellor Jeremy Hunt delivered an Autumn Statement targeted at sustainable growth.
Here's a summary of the key measures announced.
Individuals
- The main rate of Class 1 National Insurance contributions (NICs) for employees will be reduced from 12% to 10% from 6 January 2024.
- National Living wage will increase by 9.8% to £11.44 per hour from April 2024 for those aged 21 and over. The National Minimum Wage for younger workers and apprentices will also increase.
- A number of measures will be implemented to give greater flexibility for ISAs from 6 April 2024, while the contribution limits remain the same.
- Simplifications to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) which will take effect from April 2026.
- EIS and VCT income and capital gains tax reliefs are to be available for qualifying shares issued up to 5 April 2035.
Self-employed
- Class 2 NICs are to be abolished for self-employed people earning profits over £12,570 from 6 April 2024, without impacting their state pension and benefit entitlement.
- Class 4 NICs are to be reduced from 9% to 8% from 6 April 2024.
Businesses
- Full expensing is now permanent. The 50% first year allowance for special rate (including long life) assets will also be made permanent. There will be restrictions in relation to cars, assets for leasing and second-hand assets. A consultation has been announced to consider whether there is a case to extend full expensing to assets for leasing.
- The government continued its commitment to Investment Zones announcing new zones and extending tax reliefs from five years to ten years.
- Freeport tax reliefs will be extended to 30 September 2031 for Freeports in England and from five years to ten years for Freeports in Scotland and Wales.
- 75% business rates relief for eligible businesses in the retail, hospitality and leisure sectors will be extended for 2024/25.
Pillar Two
- The Autumn Finance Bill 2023 will include legislation to introduce the Undertaxed Profits Rules for accounting periods beginning on or after 31 December 2024 as well as technical amendments to the Multinational Top-up Tax and Domestic Top-Up Tax legislation.
- The Offshore Receipts in respect of intangible property (ORIP) regime will be abolished from 31 December 2024.
R&D tax incentives for businesses
- The RDEC and SME schemes will be merged from April 2024 in a bid to simplify the UK R&D tax regime. The above-the-line credit in the merged scheme will be taxed at 19%, rather than 25%, for loss-making companies.
- The eligibility threshold to qualify for the enhanced support for R&D intensive SMEs will be reduced from 40% to 30%.
- The rules relating to subsidised expenditure in the existing SME scheme will not be included in the new merged scheme, so where a grant covering part of the costs of their R&D is received the amount of relief available will not be reduced.
Employers
- No change to the rate of employers’ NIC.
- The Autumn Finance Bill 2023 will include measures to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker/intermediary on payments received in the case of error in applying the off-payroll working rules (IR35).
Property
- Reforms are to be made in Autumn Finance Bill 2023 to improve the competitiveness of the REITs regime.
VAT and duties
- VAT relief on the installation of energy-saving materials will be extended to additional technologies, including water-source heat pumps, and buildings used solely for a relevant charitable purpose will be brought within scope.
Stamp duty
- The Growth Market Exemption for stamp duty and SDRT will be extended to smaller, innovative growth markets. The capitalisation threshold for the market capitalisation condition within the exemption will be increased from £170m to £450m. The changes are to be implemented from 1 January 2024.
Environmental and Energy
- Receipts from new generating stations or additional capacity will not be subject to the Electricity Generator Levy.
- A six-year Climate Change Agreement Scheme will be launched enabling companies, that meet certain targets between 2025 and 2030, to obtain reduced rates of Climate Change Levy from 1 July 2027 to 31 March 2033.
Consultations
- The Chancellor announced a call for evidence regarding the creative industries sector (film and high-end TV tax credits).
- As part of pension reforms intended to increase investment and returns for pensioners, a consultation will consider how a worker may have one pension pot throughout their working life.
- The government has concluded its review of the R&D tax reliefs regime; further consultations may be launched in due course related to R&D intensive SMEs and to simplify the regime.
- A consultation on the VAT treatment of private hire vehicles is to be opened in 2024 further to the High Court ruling in the Uber Brittania case.
- The government will consult on a framework to support the development of the captive insurance companies sector.
Avoidance and Evasion
- The government will proceed with a new criminal offence for those continuing to promote avoidance schemes after receiving a stop notice.
- Previously flagged measures to increase the level of data collected from employers, directors and the self-employed are to go ahead from the 2025-2026 tax year.
- Closing the tax gap remains a focus of government and a package of measures will be introduced to reduce opportunities for tax fraud in the construction industry.
- The government considers further action may be needed to tackle abuse of the R&D tax regime and a compliance action plan is expected from HMRC in due course.
For more information and insight, join our webinar on November 29 at 2:30pm
