Autumn Statement 2023

The Chancellor, Jeremy Hunt, today unveiled the Governments tax and spending plans in the Autumn Statement.

With inflation falling to 4.6% in October 2023 (11% last autumn), Jeremy Hunt’s focus was on growing the economy and making work pay.  Large businesses will welcome measures to make permanent the “full expensing” of eligible capital expenditure, although this will offer little real help to smaller business who already benefit from the £1m Annual Investment Capital Allowance relief.

Smaller businesses will however welcome the announcement of a business rates support package worth £4.3 billion over the next five years, with measures that include the freezing of the small business rates multiplier for a fourth consecutive year and the extension of the retail, hospitality and leisure rates relief.

As usual, the devil is in the detail, and the Treasury documents contain far more information than the headlines.

We have listed the important announcements below, but please give us a call on 01228 711888 or our Dumfries office number on 01387 270340 if you have any queries about how these might affect you or your business.

Announcements

For those with company cars or vans, it was announced that the Government will maintain the van benefit charge and the car and van fuel benefit charges at 2023/24 levels for 2024/25.

For those who like a tipple, all alcohol duties will be frozen until 1 August 2024.

Duty rates on all tobacco products will increase by RPI + 2%, with the duty on hand-rolling tobacco increasing by RPI + 12%.  This takes effect from 6pm on 22 November 2023.

To simplify the Self Assessment tax system, the Government have announced that, from 6 April 2024 onwards, taxpayers who have previously been required to submit a tax return solely because their PAYE employment earnings exceeded a certain threshold will no longer be required to do so. This threshold is being withdrawn, which will remove an estimated 338,000 taxpayers from the Self Assessment tax system.

The Government continued its commitment to the ‘Triple Lock’ which is used to uprate the State Pension and an increase of 8.5% will be applied from April 2024.  The level of State Pension for anybody who reached State Pension age after 2016 will increase from £203.85 to £221.20 per week.    Those who reached pension age prior to 2016, and those receiving Pension Credits, will also receive an 8.5% increase.

More pension changes afoot for those who have workplace pensions in that, if requested, employers will have to pay relevant pension contributions into an employees own existing pension, rather than automatically enrolling them into the arranged workplace pension scheme.

Good news in that it was announced that the Mortgage Guarantee Scheme, which supports the availability of 95% loan-to-value mortgage products, is going to be extended until the end of June 2025.  This is great news for homebuyers with small deposits and will assist first time buyers get on the housing ladder.

For those in the business of retail, hospitality and leisure, the business rates relief of 75% for eligible properties will be extended for 2024/25.  This will help around 230,000 businesses.

Property developers and property owners will be interested to hear that the Government is to consult on a proposed right to convert a house into two flats scheme, as long as the building façade is not changed.  The consultation will take place early in 2024, with implementation following the same year.

A new prompt payment criteria, that may affect businesses along Cumbria’s Energy Coast, is that any business bidding for Government contracts worth more than £5million will have to show that they pay their own creditors within an average of 55 days.  From April 2025 this will reduce to 45 days and a further reduction to 30 days will follow at some point.

National Minimum/Living Wage
From 1 April 2024, the National Living Wage (NLW) will increase from £10.42 up to £11.44 per hour, with the age threshold lowered from 23 to 21 years old.

The National Minimum Wage rates will also increase from 1 April 2024 as follows:
•   Age 18 – 20    £8.60
•   Age 16 – 17     £6.40 (also applies to apprentices)

Great news that Class 1 employee National Insurance will be cut from 12% to 10% and that this change takes place from 6 January 2024 so that employees feel the benefit of this as soon as possible.

National Insurance Contributions for the Self Employed
Welcome news also in that National Insurance Contributions (NIC) for the self employed are reducing.  Firstly, Class 4 NIC, which is paid on profits above £12,570, is reducing to 8% from 9% with effect from 6 April 2024.  This charge is calculated within the Self Assessment Tax Return and the decrease will affect the tax payments due on 31 January 2026.

Secondly, Class 2 NIC, which is currently charged at £3.45 per week, is being reformed, also with effect from 6 April 2024.  Partners or sole traders with taxable profits above £6,725 will no longer have to pay the charge, however they will retain access to contributory benefits, including the State Pension.  The self employed with taxable profits under £6,725 will not get this automatic access, but will be able to pay voluntary Class 2 NIC in order to retain the right to these benefits, as is currently the position.  The Class 2 rate will be frozen at £3.45 per week for 2024/25.

Figures from HM Revenue & Customs suggest that these two changes will result in a saving of £350 for the self employed earning at a rate of £28,000 for 2024/25.

Capital Allowances
The full expensing policy for plant and machinery has been made permanent after being announced in the Spring Budget 2023 that this would only last for 3 years. This allows businesses to receive full relief for the whole cost of qualifying plant and machinery investment.

This means companies subject to 25% Corporation Tax will receive a benefit of 25p for every £1 they spend on plant and machinery.

The 50% First Year allowance for special rate assets such as solar panels, integral features and thermal insulation has also been made permanent.

Research and Development tax reliefs
The combining of the two current Research and Development (R&D) schemes, RDEC and SME, takes place from 1 April 2024 as planned.

The notional tax rate applied to loss-makers within the merged scheme will be lowered from 25% to 19%.

From 1 April 2024, qualifying R&D companies where the R&D expenditure is at least 30% of their total expenditure will be able to claim a payable credit for their qualifying expenditure. This has been reduced from 40%, making this available for more companies.

Please give us a call on 01228 711888 or our Dumfries office number on 01387 270340 if you have any queries about how the above might affect you or your business.