A Business-Friendly Budget
The 2023 Autumn Statement didn’t deliver the groundbreaking announcements some were hoping for. Inheritance tax, for example, wasn’t even mentioned despite weeks of anticipation that it would be abolished or the IHT rate cut. Instead, the focus of the Autumn Statement was on economic growth via tax cuts for businesses.
With an general election within the next 12 months and a government nervous about its chances of remaining in power, the Chancellor’s economic plans were understandably understated and distinctly business-friendly.
Headlines for businesses
The most notable changes set out by the Chancellor Jeremy Hunt that will impact the business community include:
· Plant and machinery reliefs - Full expensing capital allowance rules have been made permanent, removing the previous expiry date of 1 April 2024. This gives companies a 100% first-year allowance for capital expenditure on main rate assets, such as plant and machinery (50% for special rate equipment). However, it is available only for expenditure incurred by existing businesses.
· Simplification of research and development tax relief – Additional changes to the R&D tax relief regime will see a merging of the existing R&D expenditure credit and SME schemes from April 2024. The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%. The scope of additional relief for loss-making R&D-intensive SMEs will also be expanded.
A reduction in the percentage of an SMEs’ expenditure that must be incurred on qualifying R&D to qualify for the relief was also announced (this is expected to bring into scope an additional 5,000 businesses).
· Business rates – The small business multiplier for business rates is to be frozen at 49.9p for a further year. Also, the 75% business rate discount for eligible retail, hospitality and leisure properties is to be extended for one year until the end of the tax year ending 2025.
· Stamp duty – Legislation will be introduced to ensure a 1.5% stamp duty charge on the issue and some transfers of UK shares and securities into clearance services or depositary receipt systems is not inadvertently introduced in January 2024 (under sunset provisions in the Retained EU Law (Revocation and Reform) Act 2023).
· Tax avoidance measures – Those promoting tax avoidance schemes will face stronger sanctions and a new criminal offence is to be introduced. Also, HMRC will be handed powers to bring disqualification proceedings against directors involved in promoting tax avoidance.
· National Insurance Contributions – Various classes of NICs are to be reduced or abolished. The main rate of employee NIC class 1 will be cut from 12% to 10% from 6 January 2024; while main rate of Class 4 NICs, paid by the self-employed, will be reduced to 8% from 6 April 2024. Compulsory payment of NIC class 2 by the self-employed will be abolished.
· National Living Wage – From next April, this will go up to £11.44 an hour for those aged 21 or over (after a lowering of the age threshold down to 21)
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