Autumn Statement
With so many changes and uncertainty over the last few years, Jeremy Hunt took to the dispatch box just 34 days after taking on the role of Chancellor of the Exchequer. I personally feel a lot of the promises lacked detail and will need further clarification over the next few months and that most of the announcements will have long term implications meaning now is the time to start planning for this.
Below we have set out the highlighted points but over the next few months, we will be implementing changes and advising you of any changes to keep your company in an optimal position. We will be reviewing each business and tax planning on how these changes will affect the business and you as an individual on profit extraction.
Business Tax
Corporation Tax
The Government previously announced that the rate of corporation tax will increase from April 2023 to 25% from the current 19%, Companies with Profits less than £50,000 the rate will remain at 19% but for profits more than £50,000 the rate gradually increases to 25%.
First Year Allowance (FYA) for Electric Vehicle Charge points
FYA for electric vehicle charge points will be extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
National living wage (NLW)
NLW will increase for individuals aged 23 and over from 9.7% to £10.42 an hour from 1 April 2023. Lower rates apply to people aged below 23 and apprentices.
National Insurance contributions Secondary Threshold
Class 1 Secondary NICs (the Secondary Threshold) will be fixed at £9,100 from April 2023 until April 2028.
Reforms to Research and Development (R&D) tax reliefs
For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.
A consultation will be launched on the design of a single R&D scheme. The Government will introduce legislation (which was published in draft earlier this year) to reform R&D tax reliefs by expanding qualifying expenditure to include data and cloud costs, refocusing support towards innovation in the UK, and targeting abuse and improving compliance.
Investment zones
The government will refocus the investment zones programme to a limited number of the highest potential knowledge-intensive growth clusters. Work is being undertaken to identify these clusters and will be announced in the coming months.
Additional Compliance Resource for HMRC
The government is investing a further £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers. This investment is forecast to bring in £725 million of additional tax revenues over the next 5 years.
Personal Tax
Income tax thresholds
The personal allowance will remain frozen at £12,570, and the threshold at which individuals become liable for the higher rate of 40% will remain at £50,270, in both cases until April 2028.
Additional rate of income tax (ART)
The 45% ART threshold will be lowered from £150,000 to £125,140 from 6 April 2023. The rates are different in Scotland will be set when the Scottish Government have their budget in early December 2022.
National insurance thresholds
The main thresholds will remain frozen until April 2028.
Inheritance Tax nil rate bands
These will remain frozen until April 2028. The nil-rate band is frozen at £325,000, the residence nil-rate at £175,000, and the residence nil-rate band taper will continue to start at £2 million.
Dividend Allowance
The dividend allowance will be cut from £2,000 to £1,000 from April 2023, with a further reduction to £500 from April 2024.
Capital gains annual exempt amount
The exempt amount will be reduced from £12,300 to £6,000 from April 2023, further reducing from April 2024 to £3,000.
Pensions triple lock
Protected, in April State pension will increase in line with inflation.
Indirect Taxes
VAT registration and deregistration thresholds
The thresholds will be frozen at their current levels of £85,000 until April 2026.
Vehicle Excise Duty on Electric Vehicles (VED) – Road Tax
From April 2025, electric cars, vans, and motorcycles will pay VED in the same way as petrol and diesel vehicles.
Online Sales Tax (OST)
The government has decided not to introduce an OST. A response to the OST consultation will be published shortly.
Import tariff suspension
Import tariffs will be removed on over 100 goods for two years.
Fuel Duty
There is a proposed £0.12 per litre increase on Fuel duty which would increase your Fuel at the pump dramatically, this has not been ratified yet.
As ever if you have any queries do get in touch but we will be digesting this and be in touch soon with how we plan to navigate these changes.