Autumn Statement 2023

3 months, 2 weeks ago by Oliver Atkinson

The Chancellor Jeremy Hunt delivered the 2023 Autumn statement to the House of Commons yesterday, following considerable speculation over what the government may choose to do in the wake of numerous inflation rate tax changes over the last 18 months. A fair number of adjustments have been made in this statement, so let’s take a look.

Main Tax Rates & Allowances

To start, there are some tweaks to the National Living Wage thresholds, as well as increases for pay rates of across the board, as follows:

• Aged 23 and over – from £10.42 to £11.44
• Aged 21 to 22 – from £10.18 to £11.44 - this age group is no longer a separate category and will be paid at the same rate as those who are 23 and over.
• Aged 18 to 20 – from £7.49 to £8.60
• Aged 16 to 17 and Apprentices – from £5.28 to £6.40

Some significant changes are also coming to National Insurance Contributions:

• Class 1 National Insurance to be cut from 12% to 10% from the 6th Of January 2024
• Class 2 National Insurance is to be abolished for the self-employed from April 2024, except in circumstances in which the payment is voluntary, in which case the rate will be frozen at £3.45 per week.
• Class 4 National Insurance will be cut from 9% to 8% starting in April 2024

The lifetime allowance on pensions will be abolished from 6th of April 2024.

Another area being tweaked is ISAs. The restrictions on ISAs are being eased, with multiple subscriptions to ISAs of the same type being allowed from April 2024. In conjunction with this measure, partial transfers between providers will be allowed, dormant ISAs will longer require an annual reapplication and the ISA reporting system will be digitalised.

Business Rates

For those paying business rates, the Chancellor announced that the 75% business rates discount for retail, hospitality and leisure will continue for at least another year. The business rates multiplier will also be frozen through 2024-25 so there should be little change to business rates for the upcoming tax year.
Corporation Tax Given there have been some significant adjustments to corporation tax in the last year, the Autumn Statement provided only a few items on this front, namely that the ‘full expensing’ policy that comprises a 100% first-year allowance for qualifying Plant & Machinery assets is to be made permanent, along with the 50% first-year allowance for special rate assets.

There were also some notes on R&D tax relief. The government has announced the the RDEC and SME schemes are to be merged, with any expenditure from 1st April 2024 onwards to be claimed through the merged scheme.

The threshold for additional relief for loss-making, but research-intensive SMEs, is also to be lowered from 40% to 30% from the same date. This will include a one-year grace period so that companies whose expenditure temporarily drops below the 30% threshold will still be able to claim.

Other Tax & Changes

• In IR35 news HMRC, will be able to reduce the PAYE liability for a deemed if they believe a genuine error has been made in applying the off-payroll working rules.
• There will be a reform to CIS Gross Payment Status testing, where HMRC will now include VAT into the compliance test. They will also gain extended powers in this area to tackle fraud.
• Alcohol duty is once again to be frozen, this time until August 2024.
• The pension triple-lock will continue, so the state pension rate will rise by 8.5% for the upcoming tax year, and other benefits will be increased by 6.7%.
• A £4.5 billion fund for manufacturing will be made available from 2025-26 for a number of sectors, including automotive, clean energy, life sciences and aerospace.
• Several new Investment Zones will be created, including Greater Manchester, as well as some in the Midlands and Wales that the government will target to increase the level of investment into relevant local industries in these areas.

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