AUTUMN STATEMENT 2023

On 22 November 2023, the chancellor, Jeremy Hunt delivered the Autumn Statement outlining the government’s plans regarding taxes and spending.

Below, we will outline the main takeaways from the statement.

Capital Allowances

The government have ceased the expiry date of 1 April 2026 for which companies can 100% expense main rate expenditure on plant and machinery. For special rate expenditure, 50% of this can be expensed in the first year.

This will allow for encouraged investment in capital expenditure by companies to promote growth. This will lead to an immediate relief of tax payments due to HMRC.

Research & Development

There is to be a merger between the Research and Development Expenditure Credit (RDEC) and the SME schemes, with expenditure incurred in accounting periods beginning on/after 1st 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% to 19%.
The intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%, bringing approximately 5,000 more R&D intensive SMEs into scope of the relief. In addition, the government is introducing a one-year grace period, so that companies that dip under the 30% qualifying R&D expenditure threshold will continue to receive relief for one year.

National Insurance Contribution

Effective from 6th January 2024:

The main 12% rate of employee NICs will be cut to 10% for those with earnings between the primary threshold (£242 per week) and the upper earnings limit (£967 per week). This is a welcomed move by the government as it will lead to a saving of £450 for someone on an average salary, during a time where the cost of living is affecting many peoples livelihood.

Effective from April 2024:

It was announced that the rate of Class 4 contributions is to be cut from 9% to 8% on profits between £12,570 and £50,270.
Compulsory Class 2 contributions of £3.45 per week are to be abolished. Those with profits of less than £6,725 may still wish to make voluntary contributions to earn a state pension and other government benefits in future.

National Living Wage (NLW) and State Pension

From 1 April 2024, the NLW will increase to £11.44 an hour for eligible workers aged 21 and over. Furthermore, the state pension will be increased by 8.5%.