Chancellor Jeremy Hunt has just delivered his Autumn Statement.
He had promised us the Autumn Statement would focus on supporting entrepreneurs, cutting business and personal taxes, raising business investment and getting people into work, introducing it as an “Autumn Statement for Growth”. Has he kept this promise?
In his opening remarks, Mr Hunt said that while the government has taken difficult decisions to put the economy back on track and halve inflation, “the work is not done”. As such, the chancellor stated that while preparing the Autumn Statement, his priorities were to avoid big government spending and high tax and, instead, cut taxes and “reward hard work” with 110 “growth measures” for businesses.
Let's look at the key points of the Autumn Statement.
Full Expensing Capital Allowances
Full Expensing Capital Allowances has been made permanent (although we'd have to argue exactly what 'permanent' means in politics).
Companies and businesses pay tax on depreciation charged in their accounts (so even though while depreciation does reduce profit, it is still taxable!). This means relief from investing in assets comes not from depreciation, but from Capital Allowances … including Full Expensing.
This is a useful, not to mention, timely reminder that all businesses should try to maximise their capital allowances.
This can be done in a number of ways including:
- When buying a commercial property
You can commission a capital allowance survey to maximise the relevant tax relief opportunities. If you don't you will probably miss out on these reliefs and end up paying too much tax.
- Refurbishing offices, shops, and other business premises
If you are planning to refurb, make sure you claim all the possible capital allowances in the new fixtures, fittings, and machinery.
- Refreshing your company car policy
It could be possible a different type of vehicle will get you more relief than your current fleet.
To us, this seems like a carefully targeted relief. Businesses with a heavy reliance on investment in physical assets like property and plant will benefit. Service sectors, less so.
If you would like to explore the potential benefits of Full Expensing Capital Allowances or maximising Capital Allowances generally, please contact us today.
Encouraging British Innovation
On the pretext of simplifying the system and boosting innovation, from April 2024 the two existing R&D schemes for large Companies and SME's will be merged.
Loss-making companies within the scheme will be taxed at 19%, not the current 25%. The new threshold has been set to help more loss-making “R&D intensive” SMEs succeed.
In addition, the threshold for additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%. The Chancellor claims this will allow around 5,000 more SMEs to qualify for the relief. The government will also introduce a one-year grace period so that if companies' R&D spend dips under 30%, they will still receive relief for one year.
Changes had already been made to clarify the definition of R&D, tighten up on procedures for making a claim and prevent people from making spurious claims.
While it is true that R&D relief is hugely valuable to innovative businesses of every size and at every stage, whether these changes actually simplify and improve the system will hinge on the detail.
If you would like to discuss how your business may be able to benefit from the new R&D provisions, please contact us today.
National Insurance
Politicians often say National Insurance isn't a tax, unless, of course, they're cutting it! Mr Hunt has announced some bold cuts that he was careful to underline come with the “blessing” of The Office for Budget Responsibility:
- Self-employed Class 2 NI will be abolished from April next year.
- Self-employed Class 4 NI will be lowered by 1% to 8% from April '24. This will represent a saving of £350 on £28,200.
- Employees NI will fall 2% from 12% to 10% from 6th January. This will represent a saving of £450 on £35,400.
National Insurance is a concern for individuals and businesses alike. If you'd like any further details, please contact us today.
Other measures
The Autumn Statement also included a number of additional measures that could be of benefit to your business:
- Increased numbers of apprenticeships across a range of targeted sectors such as engineering.
- Reduced red tape for planning applications and new home building.
- £4.5bn funding for British manufacturing in zero-emission motor, aerospace, life sciences, and green power.
- The government will introduce a business rates support package worth £4.3bn over the next five years to support small businesses and the Retail, Hospitality and Leisure sector.
- National Living Wage (for those aged 21 and above) up to £11.44 an hour from April alongside increases for 16-20 year olds.
- New legislation will extend the expiry date for EIS and VCT reliefs from the 5th April 2025 to 2035.
- The UK's Investment Zones programme in England will be extended from 5 to 10 years and three new zones will come into being in Greater Manchester, West Midlands and East Midlands.
We appreciate that the announcement of a new statement can be an unsettling time for businesses. If you have any concerns or would like to dig deeper into the detail to identify if and how these new measures could impact your business, please get in touch with our team.