Against a backdrop of reducing inflation and greater headroom for spending, the Chancellor, Jeremy Hunt announced several tax cuts and boosts to business in his ‘Autumn Statement for Growth’. We’ve put together a selection of the measures we think are most significant.
Several measures were announced which benefit self-employed individuals.
The main rate of Class 4 NICs payable on self-employed profits between £12,570 and £50,270 will be reduced from 9% to 8% from 6 April 2024.
In addition, Class 2 NICs payable by self-employed individuals with profits in excess of £12,570 will be abolished from 6 April 2024. Further reforms to Class 2 NIC are expected for those lower paid self-employed individuals who currently pay voluntary contributions.
The main rate of Class 1 employee NICs, which is payable on earnings between £12,570 and £50,270, will be cut from 12% to 10% from 6 January 2024. For the average worker earning £35,400 this should result in a tax cut for 2024/25 of over £450.
Full Expensing, whereby companies are eligible for a 100% First Year Allowance (FYA) on qualifying main pool assets and a 50% FYA on special rate pool assets, has been made permanent. This relief was previously expected to cease on 31 March 2026. This is expected to increase business investment by £3 billion per year according to the Office for Budget Responsibility (OBR).
A technical consultation will also be launched on wider changes to simplify the UK’s capital allowances legislation.
Research and Development (R&D) relief
Following consultation, the R&D Expenditure Credit (RDEC) and SME schemes will be merged into a single scheme for expenditure incurred in accounting periods beginning on or after 1 April 2024. The rate under the merged scheme will be set at the current RDEC rate of 20%.
The notional tax rate applied to loss-making companies within the merged scheme will be reduced from 25% to 19%.
The threshold for a company to be considered R&D intensive (and therefore benefit from an enhanced rate of relief) will be reduced from 40% to 30% for accounting periods starting on or after 1 April 2024 which is expected to allow around 5,000 extra SMEs to benefit. A one-year grace period will also be introduced where companies dip under the 30% threshold.
Freeports and Investment Zones
The Investment Zones programme and Freeport tax reliefs will be extended from five to ten years.
Three more Investment Zones have been agreed in the West Midlands, East Midlands and Greater Manchester regions with a focus on advanced manufacturing. A second investment zone in Wales was also announced, which means 6 out of 13 Investment Zones have now been confirmed with the remainder expected to be announced by summer 2024.
The government will legislate to extend the Enterprise Investment Scheme and Venture Capital Trusts to 6 April 2035 (previously scheduled to end from 6 April 2025).
In relation to business rates, the small business multiplier will be frozen for another year and the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be increased in line with September’s Consumer Prices Index. These measures will take effect from 1 April 2024 in England.
This material provides only an overview of the regulations announced at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. No responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the author or Specialist Accounting Solutions Ltd.