On Wednesday the 22nd of November, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Autumn Statement speech.
The Autumn Statement package sets out a number of tax measures designed to strengthen economic growth through supporting British businesses and increasing the number of people in work.
The statement also announces a range of administrative changes which make the tax system simpler and more modern, ensuring businesses can interact with it more easily.
Below we summarise the key tax measures.
Capital Allowances – permanent full expensing
At Spring Budget 2023, the government introduced two new temporary first-year allowances.
For qualifying expenditure on the provision of plant or machinery incurred on or after 1 April 2023 but before 1 April 2026, companies can claim:
- a 100% first-year allowance for main rate expenditure — known as full expensing
- a 50% first-year allowance for special rate expenditure
The government is making full expensing permanent.
Reforming requirements to file a Self Assessment tax return
The government will no longer require individuals with income taxed only through Pay
As You Earn to file a Self Assessment return from 2024-25.
Employee and self-employed National Insurance Contributions
From 6 January 2024 the main rate of Class 1 employee NICs will be cut from 12% to 10%.
For the self-emplyed, the main rate of Class 4 self-employed NICs will be reduced from 9% to 8% and Class 2 self-employed NICs will be abolished.
Merger of R&D tax reliefs
The existing Research and Development Expenditure (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 to be claimed in the
merged scheme. Merging schemes is a significant tax simplification, including an aligned set of qualifying rules and a more visible above the line credit. 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%.
Making Tax Digital: small business
The government intends to maintain the current MTD threshold at £30,000 and to simplify and improve the system. The aim is to simplify and improve the design of quarterly updates, relax the reporting and record-keeping requirements for taxpayers with more complex affairs (such as landlords with jointly-owned property), remove the requirement to provide an end of period statement, exempt some taxpayers (including those unable to obtain a National Insurance number) and enable taxpayers using MTD to be represented by more than one tax agent. These changes are to have effect from April 2026.
Annual Tax on Enveloped Dwellings (ATED): annual increase
The annual chargeable amounts for ATED will be uprated by the September CPI figure of 6.7%
for the 2024-25 ATED charging period.
The chargeable amounts will be as follows:
- £4,400 for an interest in a property valued over £500,000 and up to £1 million;
- £9,000 for values up to £2 million;
- £30,550 for values up to £5 million;
- £71,500 for values up to £10 million;
- £143,550 for values up to £20 million;
- £287,500 for values exceeding £20 million.
Expanding the cash basis
The government announced that it will amend the income tax trading income cash basis by removing the turnover thresholds, setting the cash basis as the default method of calculating taxable profits, removing the £500 limit on interest deductions and removing the restrictions on using relief for losses. These changes will also apply to the trading income cash basis for partnerships.