The Chancellor Jeremy Hunt published the Government’s Autumn Statement last week. In total, the Chancellor spoke of 110 growth measures and underscores the expected pro-growth agenda.  Here is our easy-to-digest summary of the key measures unveiled.

R&D tax reliefs
The Chancellor confirmed that the proposed reform of the R&D tax reliefs will be going ahead, with the merged RDEC and SME scheme applying for accounting periods beginning on or after 1 April 2024.

The enhanced support for R&D intensive SMEs will also go ahead with effect for expenditure incurred from 1 April 2023, and the intensity threshold will reduce to 30% (from 40%) from 1 April 2024. This is expected to bring 5,000 more companies within the scope of the relief. Finally, it was confirmed that R&D claimants will not be able to nominate third-party payees from 1 April 2024, and no new assignments of R&D tax credits will be possible from 22 November 2023.

Please also remember that from 1 April 2024 there will be restrictions placed on claiming overseas expenditure.

Class 1 NIC reduction
In a surprise move, with effect from January 2024, the Government has decided to reduce the main rate of employee NIC payable, from 12% to 10%. The rate applies to employee earnings between the Primary Threshold £242 per week (£1,048 per month) and the Upper Earnings Limit £967 per week (£4,189 per month). So for example, an employee earning £2,950 per month would see a reduction in NIC payable of £38.04 per month (£456 per year), from January 2024. It is anticipated the new employee rate will be applied for the remainder of the current tax year 2023/24, and for the whole of 2024/25.

Class 2 NIC abolition
From 6 April 2024, self-employed people with profits above £12,570, the lower profit threshold, will not be required to pay Class 2 NIC but will still have access to contributory state benefits including the state pension. Prior to 6 April 2024, self-employed people with profits between the small profits threshold of £6,725 and the lower profit threshold of £12,570 did not pay Class 2 NIC but had access to contributory benefits and therefore this will remain the same from 2024 onwards. The option to voluntarily pay Class 2 NIC where profit levels are below £6,725 is still available in order to allow self-employed people to obtain NIC credits and will remain at the weekly rate of £3.45 for 2024/25.

Class 4 NIC main rate reduction
From 6 April 2024, the main rate of Class 4 NIC will reduce from 9% to 8%.

Venture capital trusts and enterprise investment schemes
Investment in venture capital trusts (VCT) and enterprise investment schemes (EIS) was due to end on 5 April 2025. This is expected to be extended to 5 April 2035.

Expansion of the cash basis
Legislation will be introduced to expand the cash basis for self-employed taxpayers including those in partnerships from the tax year 2024/25. The changes will not apply for property businesses, companies or those entities already excluded from the current cash basis regime.

Capital allowances for Companies
Full expensing’ of expenditure by companies on plant and machinery is to be made permanent. ‘Full expensing’ refers to first-year capital allowances available to companies only at 100% for main rate expenditure and 50% for special rate expenditure. This was due to end on 31 March 2026 but this date will now be removed by legislation.

ISAs
From 6 April 2024, the Government will make changes to the individual savings account (ISA) system that will:

  • allow multiple subscriptions in each year to ISAs of the same type
  • remove the requirement to make a fresh ISA application where an existing ISA account has received no subscription in the previous tax year
  • allow partial transfers of current year ISA subscriptions between providers
  • harmonise the account opening age for any adult ISAs to 18
  • allow long-term asset funds to be permitted investments in the Innovative Finance ISA
  • allow open-ended property funds with extended notice periods to be permitted investments in the Innovative Finance ISA

If you have any questions on key changes in the Autumn Statement 2023, why not contact our tax team.  Diane.aldrige@cvag.co.uk or Charlotte.parker@cvag.co.uk