Autumn Statement 2023 - Key Updates and Changes

22 November 2023

Autumn Statement 2023

Learn more about how the Autumn Statement on the 22nd November 2023 affects you, your business and the key changes to be aware of.

With the announcements on the 22nd November 2023 from the Chancellor of the Exchequer, several notable changes have been made to the state budget that affects both businesses and individuals alike. Here, we take a look into all the changes and the effects of the changes. 
 

Business Tax

Whilst many businesses were hoping for a reduction in the current tax rate of corporation tax from the 19% - 25% scale depending on whether business profits are below £50,000 or above £250,000, unfortunately this did not occur but there was a significant change to capital allowances.

Capital Allowances

The budget turned the ‘full expensing’ capital allowances announced in the Spring Budget 2023, from a temporary measure to a permanent one. This means businesses can claim up to 25p off their corporation tax bills for any plant, machinery or computer equipment purchased that qualifies for the relief and the cap of £250,000 for capital expenditure has remained permanently removed. This means that any qualifying asset in the main pool can have 100% of relief and any asset in the special pool can have 50% of relief. The end date of 31st March 2026 was also removed allowing this relief to used every year moving forward.

R&D

The Research & Development Tax Credit schemes will received enhanced support. The two different schemes of SME and RDEC will be rolled into one scheme with one higher rate of relief. Whilst further discussion of how this is to be implemented moving forward is to be announced, this will remove the challenges for companies that take on R&D to determine allowable expenditure between the schemes and also help businesses recover more tax relief to continue with driving their innovation.

Gambling Tax

The Government is expected to bring forth further proposals to turn the remote gambling tax (currently in three parts and taxed determined how you play) into a single tax.


Personal Tax

The Autumn Statement further announced changes to personal taxation. The key changes were around an individual’s National Insurance contributions but there were a few other updates regarding self-assessment and LISAs too. 

National Insurance

Self employed - two key changes were made here for self-employed individuals for their national insurance. The first change was that Class 2 national insurance contributions were scrapped for anyone earning more than £12,570 within the tax year. Anyone earning less than this may still volunteer to pay Class 2 to maintain their contributions. 
The second change that occurred here was a reduction in the payable rate of those that pay Class 4 national insurance, those being individuals earning above £12,570. The rate of NI was reduced from 9% to 8% on all profits above this threshold.

Employed - much like self-employed individuals, the PAYE individuals, currently just under 28M citizens in the UK, got a reduction in their NI contributions too. Any citizen earning more than £12,570 will see a reduced rate of NI from 12% to 10% but this will be enacted as of 6th January 2024 rather than 6th April 2024. 

Businesses - whilst businesses did not see a reduction in their NI contributions on paying employees, any business hiring veterans will see a one year extension into the 2024 - 2025 tax year to claim NI relief on that individual’s business contribution. 

Individual Savings Account (ISAs)

The government announced that ISA scheme rules will be widened to encourage more people to save and invest. These rules included multiple subscriptions to the same kind of ISAs within the same tax year and also an enhanced digital reporting system for investors to support ISA savings growth. 

Self-Assessment

Announced in the Spring Budget 2023 but reconfirmed in the Autumn Budget 2023, the threshold in which individuals that earn more than £100,000 from a PAYE employment will no longer be required to file a self-assessment if they earn under £150,000 via that employment. This will ease the administrative burden on higher earning individuals. 


National Living Wage

Not only were there changes for individuals announced with heir national insurance but also some significant changes to the national living wage. 

The national living wage rates were increased for the 2024 - 2025 tax year and also the eligibility age for the rates were reduced from being 23 to 21 years old. This means many individuals will see an increase in their hourly rate. The new rates were set to:

21+ years old - £11.44 per hour
18 - 20 -years old - £8.60 per hour
Under 18 & Apprentice - £6.40 per hour

 

Tax Simplification

There were several changes made for simplifying the tax processes moving forward. 

Making Tax Digital

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) was designed to be made simpler. The requirement to file an ‘End of Period Statement’, being a year end statement, was removed and individuals that do not have NI numbers were exempted from filing. Taxpayers can also have numerous tax agents to handle their tax affairs rather than one at a time per each tax. Further consultations regarding the delayed roll out of this are expected in December 2023. 

Cash Basis

Any sole trader business that makes £150,000 or less in turnover often have applied the ‘cash basis’ - recording turnover and expenses as when they are incurred - but this will be set as a default for all businesses unless they exceed £150,000 in turnover or opt into the accruals method. 
 

Business Rates

The Chancellor announced that Retail, Leisure and Hospitality businesses will get a one year extension to the 75% business rate reduction into the 2024 - 2025 tax year to help support the higher running costs of the business. 
 

Conclusion

Whilst there were many notable changes announced in the Autumn Statement, there is still much anxiety for small business owners and individuals are there were no key announcements regarding major taxes such as VAT, Income Tax and other business support. Whilst wage increases and tax cuts are always welcome on an individual basis, the changes do also seem to add increased pressure in other areas as well. 
 

If you want to learn how the changes affect you or need help in implementing any of the changes, please don’t hesitate to get in touch with RFBS today.

Categories

Latest News