UK 2023 Autumn Budget Summary

Chancellor Jeremy Hunt announced today, 22 November 2023, his Autumn Budget Statement. Hunt announced that the combined impact of his statement will be to raise business investment, get more people into work, reduce inflation next year and increase GDP, with heavy focus on rewarding “effort and work”.

 

It is announced that inflation and debt is now under control and with ongoing efforts to control government expenditure, this has allowed for extra return for people and businesses on actual tax deductions.

 

See how the 2023 Autumn Budget announcement could affect you and your business by having a look at our summary below:

 

  • COMPANIES

    • Full Expensing for new IT, machinery and equipment now permanent – For every £1 that a business invests in, their corporation tax is cut by up to 25p.
    • AIA remains for second hand machinery investment up to £1million per annum
    • Corporation tax, CGT and VAT rates remained the same
    • SMEs will be supported with tougher regulation on late payers to improve prompt payments
    • The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system.
    • The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%
    • The threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%,
    • EMI Scheme simplified paperwork and payment process
    • The Climate Change Agreement Scheme will be extended
    • Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
    • £50m in funding over the next two years to increase the number of apprentices in engineering and “other key growth sectors”
    • Plan to reform the time it takes for clean energy businesses to access the electricity grid
    • £500m Investment over the next two years to fund more “innovation centres” to help make the UK an “AI powerhouse”
    • Additional £4.5bn of support between 2025 and 2030 for strategic manufacturing
    • Funding and tax breaks for investment zones and freeports in Great Britain
    •  (England Only ) New plan to speed up planning applications

  • SELF EMPLOYED

    • Class 2 National Insurance abolished, saving the average self-employed person £192 a year
    • Class 4 National Insurance, will be reduced from 9% to 8% from April 24 (this is paid on all self employed earnings between £12,570 and £50,270)
    • Cash Basis is now the default accounting method with the turnover limit for this being removed
    • Businesses will now have to elect to use the accruals basis of accounting from 6th April 2024
    • Removed the restrictions on using relief for losses made in the cash basis, aligning the rules with accruals
    • Removed the £500 limit on interest deductions in the cash basis, aligning the rules with accruals
    • Simplifying CIS – Will now use VAT compliance as a test check for Gross Payment Status eligibility
    • No Changes to VAT, Income tax, Inheritance Tax, CGT rates
    • (England Only) The government will freeze the small business rates multiplier for a further year
    • (England Only) The 75% discount on business rates up to £110,000 for retail hospitality and leisure businesses extended for another year
    • Working on simplifying MTD for income tax when it is introduced in 2026

  • EMPLOYERS

    • Employee National Insurance rate will be cut by 2 percentage points from 12% to 10%, from 6 January 2024
    • National Living Wage will rise 9.8% from £10.42 to £11.44 per hour for everyone from the age of 21 in April 2024
    • Workers will be given the right to choose their own pension
    • Employers will soon need to notify HMRC of actual hours paid to employees in submissions and not just total gross wages
    • As announced in March 23 – the annual allowance for pension payments is £60k – It should be noted that the limit covers both employer and employee contributions
    • The government will maintain the Van Benefit Charge and the Car & Van Fuel Benefit Charges at 2023-24 levels for 2024-25

  • INDIVIDUALS

    • Employee National Insurance rate will be cut by 2 percentage points from 12% to 10%, from 6 January 2024
    • National Living Wage will rise 9.8% from £10.42 to £11.44 per hour for everyone from the age of 21 in April 2024
    • Benefits will increase next year by 6.7%, the inflation rate for September
    • Increase the Local Housing Allowance rate (that helps people on benefits pay their rent to a private landlord) to the 30th percentile of local market rents (This will give 1.6 million households an average of £800 of support next year)
    • Triple lock maintained for pensioners – the state pension will increase by 8.5% next year, in line with average earnings. It will reach £221 a week from April, worth up to £900 more a year
    • Workplace pension reforms, with the aim of allowing workers to set up a “pot for life” with a pension fund of their choice
    • Savers and investors will be able to hold multiple ISA subscriptions from April 2024
    • Relaxed ISA requirements and procedures, including removing the requirement to reapply for an existing ISA annually
    • Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to
    • Welfare recipients will be made to undertake a mandatory work placement if they are still looking for a job after 18 months “to increase their skills and improve their employability”.  If they “choose not to engage with the work search process for six months, we will close their case and stop their benefits”
    • Increase on duty on hand-rolling tobacco by an additional 10% above the tobacco duty escalator
    • Freeze on all alcohol duty until 1 August 2024

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