The chancellor, Jeremy Hunt, delivered his Autumn Statement yesterday, Wednesday, 22 November 2023, outlining the UK government’s tax and spending plans. 

Please find below the key announcements that are relevant to you and your business, we have also added in some additional comments from our experts.

We are dedicated to helping you navigate these changes, as part of this you have access to: 

• A detailed summary of The Autumn Statement 2023. 
• Our live post-statement  'Highlights & Insights' webinar.  

Key Announcements - Employees  

National Insurance Contribution (NIC) Cuts 

Effective from 6th January 2024: 

• The main 12% rate of employee NICs will be cut to 10%. This will affect ~28 million people, saving someone on an average salary, £450.   
• The employer NIC rate will remain unchanged at 13.8%.  

What our experts say… 

This, along with the reduction in Class 4 NIC for the self-employed, is a welcome change that will give support at a time where the cost of living is on so many people's minds. We’ve done some initial calculations comparing the new rates with the old. People earning the new minimum living wage will save c.£190, while for someone with an income of £50,000, the saving will be c.£750. 

National Living Wage 
 
National living wage to increase by 9.8% to £11.44 an hour. This is expected to benefit over 2.7 million low paid workers. 

The Self-Employed  

National Insurance Contribution (NIC) Cuts 

Effective from April 2024: 

• The self-employed will benefit from the simplification of the National Insurance system, with Class 2 contributions of £3.45 per week being “abolished”. Those with profits less than £6,725 may still make voluntary contributions to earn a state benefit credit. 
• The rate of Class 4 contributions is cut from 9% to 8% on profits between £12,570 and £50,270. 

Cash basis simplifications 
 
Whilst no detail has been provided, the government announced intentions for expanding and simplifying the income tax cash basis for the self-employed and partnerships. These changes will take effect from 6 April 2024, for 2024-25 and will be included in the Autumn Finance Bill 2023. 

Corporate Tax 

The statement did not announce any major changes to the corporate tax rate.  

Off-Payroll Working (IR35) 
 
HMRC will 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. 

Full Expensing 
 
Full expensing relief for capital investment by companies in plant and machinery has been made permanent, is as a result of its success since introduction. 

Assets continue to be shown on the balance sheet of the company and the “full expensing” provides a 100% first year allowance for qualifying plant & machinery.  

A 50% first year allowance is also available for special rate assets i.e., electrical systems, cold water systems and air conditioning. 

What our experts say… 

We do not think that this is a meaningful change, in reality. By the time the original three years runs out, there will be a new Parliament, possibly with different priorities for the tax system, 'extending’ the life of the relief into perpetuity has no real effect, other than to make it more difficult for a future Parliament to get rid of it, as it will have to be actively repealed, rather than simply allowed to expire. 

R&D Tax Relief 
 
Current Research and Development Expenditure (RDEC) and SME schemes will be merged into a single scheme, effective 1 April 2024.  

Similar to the existing RDEC scheme, the new scheme will provide a payable gross 20% credit. 

Since April 2023, RDEC has been taxed at the 25% main rate of corporation tax. This results in a net benefit of 15%. Under the merged scheme, the credit will be taxed at 19%, the lower rate of CT, for loss-making companies. This increases the net benefit from 15% to 16.2%. 

R&D-intensive companies will be eligible for a separate “SME-intensive scheme”, the criteria for “R&D-Intensive” has been reduced from 40% to 30%.  

What our experts say… 

The government are touting this as a “simplification”, but it’s not at all! Supposedly converting two systems into one, but there will still be a separate system for R&D intensive businesses. And, of course, anyone who has been dealing with SME schemes historically, will now have to learn all about how the RDEC style scheme works. Not to mention all the administrative changes that have been announced! 

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

The existing sunset clauses will be extended for the EIS and VCT from 6 April 2025 to 6 April 2035 providing an additional 10 years in which the reliefs will remain available. 

Businesses Rates 

• Small businesses rates multiplier frozen for a year. 
• 75% discount on business rates for retail, hospitality, and leisure companies. 
• New investment Zones confirmed for the Midlands. 

HMRC 
 
HMRC will receive funding to give them the resources needed to collect taxes owed. HMRC say that will start by launching targeted campaigns to rectify their filing records.  

They have also started two new campaigns and are reaching out to all taxpayers who claimed either a foreign tax credit or a non-resident status on their 2021/22 tax return, with the aim of reclaiming tax from any taxpayers who have misjudged their tax situation. 

What our experts say… 

These campaigns using so-called ‘nudge letters’ are always concerning, as there is often no reason to think that there is anything wrong with people’s tax returns. For example, why write to everyone who claimed to be non-resident, when the vast majority of them actually will be? These efforts should target cases where there is a genuine reason to doubt the residence status. 

VAT relief on installing energy-saving materials 

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

Other Announcements 

• Despite various commentators’ concerns, Capital Gains Tax changes we are missing from this budget. 
• The OBR has said that headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025. 
• Pensions triple lock - basic state pension will be increasing by 8.5% to £221.20 a week. 
• Universal Credit and other benefits to increase by 6.7% from April 2024. 
• Alcohol duty frozen until 1 August 2024, but not tobacco duty. 

Next Steps

• For any queries or more information, contact your dedicated Account Manager or call us, Solihull +44 (0) 121 693 5000 or Halesowen +44 (0) 138 425 0202.