Key Announcements
In his speech, the Chancellor said the Autumn Statement sought to deliver a series of measures intended to stimulate growth in the economy, and reduce personal taxes. He said that the UK economy was “back on track” after a series of “difficult decisions” in the last twelve months, with reports suggesting that today’s statement is the first of a two-stage plan focusing on businesses and workers initially, followed by further personal tax cuts at the Spring Budget.
The statement included 110 new growth measures, the most relevant are as follows:
Taxation
The main rate of employee National Insurance will be cut from 12% to 10% from January 2024
Self-employed people with profits above £12,570 will no longer be required to pay Class 2 National Insurance Contributions (NICs), but will continue to receive access to contributory benefits and entitlements. This will take effect from 6 April 2024
Those self-employed with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit, and those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits will continue to be able to do so.
The main rate of Class 4 self-employed NICs will be cut from 9% to 8%. This will take effect from 6 April 2024.
The Lifetime Allowance will be abolished from 6 April 2024.
The Government will legislate to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules. This follows a recent consultation on the subject.
Following the Government’s recent consultation, reforms will be introduced to the Construction Industry Scheme, which includes adding VAT as part of the Gross Payment Status (GPS) compliance test, and giving HMRC more powers to remove GPS immediately in cases of fraud, alongside other simplifications.
A further £163 million will be invested to improve HMRC’s ability to manage tax debts, and to expand its debt management capacity.
New measures will be introduced to tackle the promoters of tax avoidance schemes, including a new criminal offence for those who continue to promote avoidance schemes after receiving a notice requiring them to stop; and a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance.
Employers, company directors, and the self-employed will be required to provide new or improved data to HMRC to enable better outcomes for citizens and businesses. These changes will take effect from the tax year 2025-26.
Individuals with income taxed only through Pay As You Earn will no longer be required to file a Self Assessment return from 2024-25.
The Government is extending the Growth Market Exemption, a relief from Stamp Duty (SD) and Stamp Duty Reserve Tax (SDRT), to include smaller, innovative growth markets. This will be implemented from 1 January 2024.
Small Business
Reforming R&D Tax Reliefs: The Government has said that it will merge the existing Research and Development Expenditure (RDEC) and SME schemes, with expenditure incurred in accounting periods beginning on or after 1 April 2024 to be claimed in the merged scheme. The notional tax rate applied to loss-makers in the merged scheme will be lowered from 25% as per the current RDEC scheme, to 19%.
In addition, the intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%. Ministers will also introduce a one year grace period, in order that companies that fall under the 30% qualifying R&D expenditure threshold can continue to receive relief for one year.
From 1 April 2024, R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, subject to limited exceptions, and no new assignments of R&D tax credits will be possible from 22 November 2023.
The Government will introduce a requirement that firms bidding for government contracts over £5 million from April 2024 will have to demonstrate they pay their own invoices within an average of 55 days, reducing to 45 days in April 2025, and to 30 days in subsequent years.
HMRC will rewrite guidance around the deductibility of training costs for sole traders and the self-employed, which will include clarifying the guidance to ensure that individuals can be confident that updating existing skills, maintaining pace with technological advances, or changes in industry practices are allowable costs when calculating the taxable profits of a business.
Following its review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses, the Government will maintain the current MTD threshold at £30,000 and introduce design changes to simplify and improve the system. These changes will take effect from April 2026.
The Government is also legislating to ensure taxpayers, who join MTD from 6 April 2024, are subject to the government’s new, fairer penalty regime for the late filing of tax returns and late payment of tax.
Full expensing will be made permanent, enabling investments made by companies in qualifying plant and machinery, after 1 April 2026, to continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first-year allowance for special rate (including long life) assets.
For 2024-25, the business rates small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be uprated by September CPI to 54.6p
Following its recent consultation, the Government is expanding and simplifying the income tax cash basis for the self-employed and partnerships. These changes will take effect from 6 April 2024.
The Government has published its Payment and Cash Flow Review Report and responses to the consultation on the Payment Practices and Performance Regulations 2017 and the statutory review of the Small Business Commissioner, outlining measures to combat late payments.
There will be additional support to SMEs to access global markets through UK Export Finance including reviewing the products available for SMEs and enhancing the SME-focused support that is offered.
The Government will commit to funding for Growth Hubs in 2024-25.
A new industry task force will be created to rapidly explore how best to support SMEs to adopt digital technology to improve their productivity.
Minimum wage
The National Living Wage has been increased to £11.44 per hour from April next year. It will now extend to workers of 21 and 22 years of age. Previously, the National Living Wage only covered those over 23.
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