Let’s dive into the Chancellor’s Autumn Statement for 2023, a plan designed to bolster a stronger, more resilient economy. The big news in this Autumn Statement? A whopping £20 billion yearly boost in business investment, more jobs, and tax cuts for 29 million workers. Impressive, right?
Autumn Statement’s Impact on Businesses
‘Full Expensing’ Deduction in the Autumn Statement
This is huge for businesses. Starting from 1 April 2023, as announced in the Autumn Statement, and now set to be a permanent fixture, this deduction allows companies to write off the entire cost of qualifying new plant and machinery investments against their profits before tax. This includes a 50% rate for special pool investments. It’s a big win for businesses investing in new equipment.
Annual Investment Allowances: Autumn Statement Update
This permanent allowance, fixed at £1m from April 2023, is a game-changer in the Autumn Statement. It means businesses can invest up to this amount and get tax relief in the first year. It’s a great incentive for businesses to invest in their growth.
Research and Development Changes in the Autumn Statement
There’s a mix of changes here effective from April 2023, as outlined in the Autumn Statement. For the number-crunchers, the SME additional deduction has decreased from 130% to 86%, the SME credit rate is down to 10% from 14.5%, but the R&D expenditure credit has jumped from 13% to 20%.
There’s also a new R&D Intensive SME payable credit at 14.5%. To qualify as ‘R&D intensive,’ your company’s R&D spending must be at least 40% of its total expenditure. For these companies, the relief is more substantial – you can now claim £27 for every £100 of R&D investment, compared to £18.60 for those not meeting this intensity.
The government has also decided to lower the bar a bit. The threshold for additional support for R&D intensive, loss-making SMEs is dropping from 40% to 30%. Plus, there’s a one-year grace period for companies falling just short of this threshold.
Expanding the Cash Basis
Aimed at the self-employed and partnerships, the government is expanding and simplifying the income tax cash basis. The simplification kicks in from April 2024.
Business Rates Adjustments in the Autumn Statement
Retail, hospitality, and leisure sectors get a 75% discount on small business rates for 2024-25, plus a freeze on the SBR multiplier.
Electric vehicle charge points
Businesses can still claim 100% of installation costs of charging points on their EVs as a capital allowance until 2025.
Theatre Tax Relief in the Autumn Statement
The planned reduction in relief rates for theatres has been put on hold. Instead of dropping to 30% for non-touring and 35% for touring productions from 1 April 2023, these rates will now stay at a higher 45% and 50%, respectively, until 31 March 2025.
Post-March 2025, there’s a schedule for rate changes. Starting from 1 April 2025, the relief rates will shift to 30% for non-touring and 35% for touring productions. Looking further ahead, from 1 April 2026, the relief rates are set to revert back to their original levels of 20% for non-touring and 25% for touring productions.
Autumn Statement’s Approach to Tax Avoidance
New criminal offences and powers for HMRC to deal with promoters of tax avoidance schemes, coming into play from the Royal Assent of the Autumn Finance Bill 2023. In addition to criminal charges, HMRC is being empowered with the authority to take disqualification actions against directors of companies that are involved in promoting tax avoidance. This includes those who might not be directly promoting but have significant control or influence over such companies.
Recovery Loan Scheme Extension: Autumn Statement
Extended to June 2024, this scheme helps businesses bounce back post-pandemic.
Training cost tax relief clarity
HMRC will soon clarify what training costs are tax-deductible.
Autumn Statement’s Effect on Individuals
Income tax thresholds
Frozen until April 2028. Watch out if you earn over £125,000; you’ll start paying more tax. They have reduced the additional rate bracket down from £150,000 to £125,140. Basic and higher-rate thresholds for income tax will remain frozen until April 2028.
National Insurance Changes in the Autumn Statement
Some changes here, including a cut in Class 4 NICs and a reduction in employee contributions from January 2024. From April 2024, the weekly Class 2 National Insurance Contributions (NICs), currently a mandatory flat rate of £3.45 for self-employed individuals earning over £12,570, will be discontinued.
Class 1 contributions for employees will be reduced from 12% to 10% from 6 January 2024.
Capital Gains Tax in the Autumn Statement
The capital gains annual exemption is shrinking, folks! Down to £6,000 from April 2023 and £3,000 from April 2024.
National Minimum Wage
It’s going up to £11.44 an hour from April 2024 for those aged 21 and over.
State Pension Increase in the Autumn Statement
A generous 8.5% increase from April 2024. Pensioners will receive an additional £900 annually, marking an 8.5% increase in the state pension. This raises the full new state pension to £221.20 per week and the basic state pension to £169.50 per week.
Pensions Reform in the Autumn Statement
Big changes here, like scrapping the lifetime pension allowance from April 2024 and upping the annual allowance. Concurrently, the annual pension allowance was raised from £40,000 to £60,000, and the money purchase annual allowance increased from £4,000 to £10,000 for those already drawing a pension.
Autumn Statement Extra
HMRC getting a boost
An extra £163 million to help them manage tax debts more effectively.
So, there you have it. The Chancellor’s latest moves are a mix of stability, growth, and a few nice perks, especially for businesses. Keep an eye on these changes; they might just impact your wallet or your business’s bottom line!
