Autumn Statement 2023: summary of key tax announcements

The Chancellor delivered his Autumn Statement on 22 November 2023.

The following key documentation is available:

HMRC’s overview of tax legislation and rates (OOTLAR)

HMRC’s Autumn Statement ‘tax-related documents’

Treasury Autumn Statement 2023 page

Business and employment taxes

• Capital allowances: full expensing is to be made permanent, removing the 1 April 2026 expiry date.
• R&D: a single, merged scheme will be introduced from 1 April 2024. The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%. Nominations for R&D tax credit payments (ie payments to third parties) will be stopped.
• Freeports and investment zones: the special tax site reliefs will be available for a further five years until 30 September 2031. 

National Insurance contributions

• Class 1: the main primary NIC rate will be cut from 12% to 10% with effect from 6 January 2024.
• Class 2 NICs: will be abolished, and the main Class 4 rate cut to 8% of profits (rather than 9%) from 6 April 2024. The Chancellor also hinted that the government wants in the longer term to simplify taxation for the self-employed.  

Personal taxes

• Venture capital schemes: the enterprise investment scheme and venture capital trusts will be extended by another ten years, to April 2035.
• Cash basis: the cash basis will become the default method for small businesses and various existing restrictions will be removed, from April 2024. Businesses will be able to elect out into the accruals basis.
• ISAs: a number of changes are proposed (mostly from April 2024), to simplify the scheme and widen the scope of investments that can be held within an ISA. 

Indirect taxes

• Interpretation of VAT law: in line with the government’s recent announcement, UK legislation will confirm that domestic law cannot be challenged on the basis of incompatibility with EU law. At the same time, existing UK VAT law will continue to be interpreted ‘as Parliament intended’ meaning that existing principles derived from EU law will continue to be relevant in the UK. 

Tax administration

• Making Tax Digital for Income Tax Self-Assessment: taxpayers who sign up voluntarily from April 2024 will become subject to the harmonised penalty regime for late filing and late payment. The Treasury has also outlined a number of changes to MTD for ITSA, at the same time as committing to the 2026 and 2027 start dates. Draft regulations are expected to be published for consultation before the end of 2023. 

Other announcements

• National Minimum Wage: the full National Living Wage rate will increase to £11.44/hour (up from £10.42) from April 2024 and will be extended to those aged 21 and over. The 18–20 rate will increase to £8.60/hour, and the apprentice rate to £6.40/hour.
• Pensions: the full new state pension will increase by 8.5% in April 2024 (maintaining the triple lock guarantee). Digitalisation of relief at source will be delayed ‘until April 2027 at the earliest’.
• Benefits (including Universal Credit): will increase by 6.7% from April 2024 (based on Sept 2023 inflation).

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