22 Nov 2023

Autumn Statement 2023: key tax announcements

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Anthony Newgrosh

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In today’s Autumn Statement, Chancellor Jeremy Hunt sought to ‘take the long-term decisions necessary to strengthen the economy and build a brighter future’. This included tax measures which aimed to benefit employees, the self-employed and British businesses.

The key announcements for people included:

National Insurance

  • From 6 January 2024, the main rate of Employee National Insurance will be reduced from 12% to 10%
  • From 6 April 2024, the rate of Class 4 National Insurance Contributions (NICs) on all earnings between £12,570 and £50,270 will be reduced from 9% to 8%
  • From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue receiving access to contributory benefits including the State Pension

Off-Payroll working (IR35)

  • Legislation in the Autumn Finance Bill 2023 will allow HMRC to reduce the Pay As You Earn (PAYE) liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules

Reforming requirements to file a self-assessment tax return

  • The Government will no longer require individuals with income taxed only through PAYE to file a self-assessment return from 2024/25

The key announcements for businesses included:

Capital allowances

  • Companies can now permanently claim 100% capital allowances on qualifying main rate IT equipment, plant and machinery investments
  • A 50% allowance is available for expenditure on integral features
  • The Annual Investment Allowance (AIA) remains available to all businesses including most partnerships and provides a 100% write-off for qualifying expenditure each year

Business rates

  • For 2024/25, the small business multiplier in England will remain frozen
  • For 2024/25, the current 75% relief for eligible retail, hospitality and leisure properties is being extended, up to a cash cap of £110,000 per business

R&D tax reliefs

  • The current Research and Development Expenditure (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 to be claimed in the merged scheme
  • The notional tax rate applied to loss-makers will be reduced from 25% to 19%
  • The intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%, thereby allowing such companies to claim a higher rate of R&D relief

Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs)

  • Legislation in the Autumn Finance Bill 2023 will extend the existing sunset clauses for the EIS and VCT from 6 April 2025 to 6 April 2035

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)

  • Following the Government’s review into the impact of MTD ITSA on small businesses, the current MTD threshold will be maintained at £30,000 and the system will be redesigned to simplify it. These changes will come into effect from April 2026

Electricity Generator Levy (EGL)

  • Under forthcoming legislation, exemption from the EGL will apply to new projects for which the substantive decision to proceed is made on or after 22 November 2023. The levy is still expected to end on 31 March 2028

Climate change

  • Under the new Climate Change Agreement (CCA) scheme, participants that meet agreed energy efficiency or decarbonisation targets between 1 January 2025 and 31 December 2030 will be entitled to reduced rates of the Climate Change Levy (CCL) from 1 July 2027 to 31 March 2033
  • The CCA scheme will require more regular reporting of energy and throughput data
  • Main and reduced rates of the CCL in the UK will be frozen for 2025/26

VAT relief on installing energy-saving materials

  • From February 2024, the Government will extend this VAT relief to cover additional technologies (e.g. water-source heat pumps) and buildings used solely for a relevant charitable purpose

Plastic packaging tax (PPT)

  • Legislation in the Autumn Finance Bill 2023 will increase PPT to £217.85 per tonne from 1 April 2024

Construction Industry Scheme (CIS)

  • The Autumn Finance Bill 2023 will reform CIS, including adding VAT as part of the Gross Payment Status (GPS) compliance test. This will give HMRC more power to remove GPS immediately in cases of fraud
  • Other aspects of CIS will be simplified, subject to technical consultation

As part of efforts to tackle tax avoidance, other announcements included:

  • Legislation in the Autumn Finance Bill 2023 will introduce a new criminal offence for those who continue to promote avoidance schemes after receiving a notice requiring them to stop
  • Legislation in the Autumn Finance Bill 2023 will enable HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance, including those who control or exercise influence over a company

In the meantime, to discuss any of the announcements, please get in touch with your usual BKL contact or use our enquiry form.

Also available: our Autumn Statement 2023 tax analysis.

Don’t miss our next tax webinar: Pre-election tax planning on Wednesday 6 December from 1-2pm. Find out more and register here.