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Available to watch: Autumn Statement 2023 webinar recording

| Duncan & Toplis | 30 November 2023

On Friday 24 November, our tax experts Nicholas Smith, Rebecca Bright, Christine Newitt, and Matthew Appleyard delivered a succinct overview of the impactful announcements from last Wednesday’s Autumn Statement, together with a reminder of announcements made in Spring Budget 2023.

Nick lead with his initial thoughts. The freezing of the tax thresholds, resulting in a fiscal drag, has given the government more spending power. This ‘Autumn Statement for Business’, which given its complexity has turned into somewhat of a cat’s cradle, with one or two measures requiring a watchful eye in the future, in particular the relaxation of pension schemes and the reintroduction of the Film Scheme relief.

Inflationary pressures mean there’s still less than 1% growth predicted, which isn't set to reach an average of 2% growth until 2028. This, coupled with rises in universal credit, the state pension and the National Minimum Wage - whilst some good news for individuals – is potentially not so great for businesses having to bear the cost of the wage rises, particularly labour-intensive businesses. Individuals should be mindful that cuts to National Insurance may well be quickly swallowed up or overtaken by rises in mortgage and other loan repayments. Here’s an overview of some of the announcements:

Impact for individuals

  • Personal allowances, income tax rates, and income tax on dividend income – no change. Income tax on dividend income remains unchanged from previously announced in April 2022, the dividend allowance remains at £1,000 from April 2023, before dropping to £500 from April 2024.
  • The employee rate of National insurance reduces from 12% to 10% on 6 January 2024 rather than 6 April 2024, National Insurance Class 2 has now become non-mandatory, and the Class 4 National Insurance rate will decrease from 9% to 8%. Further detail is awaited as to how self employed individuals will retain access to contributory benefits.
  • National Living Wage increases will come into effect from April 2024. For details of rates please click here.
  • Capital gains tax exemptions remain unchanged.
  • Pensions – there is now no limit on the Pension Lifetime allowance, although there is a cap on the amount of cash drawdowns at a rate or 25% before which tax is paid (capped at £268,275, excluding those with protected pension pots). A consultation will shortly open as to the practicalities of individuals having one ‘pension pot for life’ rather than multiple employer pension pots.
  • Pension contribution allowance will remain unchanged in 2024/25 from this year – an annual allowance of £60,000 per year, a tapered annual allowance of £10,000 and an adjusted income limit of £260,000.
  • Despite many rumours, inheritance tax will remain unchanged.
  • Making Tax Digital remains on schedule to be mandated from April 2026 for individuals earning over £50,000 in 2026 and £30,000 in 2027. The basis period form will still proceed (with the current financial year being the transitional year) – meaning an accounts year-end which aligns with the end of the tax year.
  • ISAs – the range of permitted investments has been widened, investors can have multiple ISAs of the same type in one year.

Indirect taxes

  • Expansion to the cash basis to make it the default method for eligible small businesses as well as removing the restrictions on turnover limit of £150,000, removal of restriction on bank interest or charges of more than £500 as an expense, and removal of restrictions on losses to be offset against other taxable income.

Impact for corporate entities

  • Capital allowances – full expensing i.e. 100% relief on new and unused plant and machinery only, annual investment allowance has been increased indefinitely to £1 million.
  • Research & Development (R&D) relief – merging of the large RDEC and the SME schemes together for accounting periods beginning on or after 1 April 2024 with the intention of simplifying and improving the system – will also allow for subcontracted R&D to be claimed (although a sub-contractor themselves cannot make a claim for R&D tax relief).
  • Nominees are no longer allowed to receive R&D tax refunds (for example, your accountant or a boutique R&D advisory firm) – refunds will be repaid directly to the claimant company.
  • The requirement for an additional information submission alongside the standard corporation tax return when making a claim for R&D tax relief.

Other items

  • Extension to the Investment zones programme from five to ten years.
  • Three new investment zones announced in Greater Manchester, West Midlands and East Midlands.
  • Sunset clauses on Enterprise Investment Scheme and Venture Capital Trusts scheme have been scrapped – new legislation will be introduced to extend these schemes past 2035.
  • EMI changes – HMRC have increased the timescale during which a claimant can advise they will be putting a claim in place from 92 days to 6 July following the end of the tax year, with effect from 1 April 2024.
  • Tax on enveloped dwellings will increase by 6.75% from 1 April 2024 in line with September 2023 CPI.

All details of last week’s announcements can be found in our Autumn Statement summary here.

You can watch our webinar below.

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