Autumn Statement – a closer look

Last week, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Autumn Statement speech.

The Autumn Statement package sets out a number of tax measures designed to strengthen economic growth through supporting British businesses and increasing the number of people in work. The statement also announces a range of administrative changes which make the tax system simpler and more modern, ensuring businesses can interact with it more easily.

In reiterating its commitment to make simplification central to tax policy development, the government has today set out the four objectives it is aiming to achieve when simplifying the tax system so that:

• tax rules have a clear consistent rationale and are easy to understand
• the burden of compliance and administration is proportionate for taxpayers and HMRC and it is easy for taxpayers to get their tax right
• taxpayers understand their obligations and options particularly at key lifecycle points, such as when they do something for the first time or infrequently
• tax policy does not unnecessarily distort the decisions of taxpayers and result in poorly informed choices

The Autumn Statement also includes measures on tackling tax avoidance and helping with the cost of living. Some of the key measures are detailed below, and information on all the measures announced today, including the annual uprating of duties and rates, can be found in the Autumn Statement 2023 and in other documents from the Office for Budget Responsibility.

An overview of all the tax legislation and rates announced today is also available. Tax Information and Impact Notes (TIINs) contain more detail on the impact of measures that are being legislated for.

Business tax

• capital allowances – permanent full expensing – at Spring Budget 2023, the government introduced two new temporary first-year allowances. For qualifying expenditure on the provision of plant or machinery incurred on or after 1‌‌‌ ‌‌April 2023 but before 1‌‌‌ ‌‌April 2026, companies can claim a 100% first-year allowance for main rate expenditure – known as full expensing – and a 50% first-year allowance for special rate expenditure. Today’s announcement makes full expensing and the 50% first-year allowance permanent by removing the expiry date of March‌‌‌ ‌‌2026
• tax reliefs – a range of measures on tax reliefs have been announced including enhanced support for Research and Development (R&D) intensive small and medium-sized enterprises, an extension to the ‘sunset date’ for freeport tax reliefs and administrative changes to the creative industry tax reliefs
• tax treatment of remote gambling – the government will shortly publish a consultation on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through a three tax structure as at present (Remote Gaming Duty, General Betting Duty, and Pool Betting Duty)

Personal tax

• National Insurance contributions (NICs) – a package of changes to National Insurance were announced including a reduction to the main rate of Class 1 NICs from January‌‌‌ ‌‌2024, a reduction in Class 4 NICs for the self-employed from April‌‌‌ ‌‌2024, and from 6‌‌‌ ‌‌April 2024 self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs. Arrangements for those paying NICs voluntarily are unchanged, and the government has also frozen Class 2 and Class 3 NICs rates at their 2023 to 2024 levels for 2024 to 2025, and the Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold will also remain frozen for the 2024 to 2025 tax year. Additionally, the NICs relief for employers who hire former members of the UK regular armed forces has been extended to cover the 2024 to 2025 tax year
• individual Saving Account (ISA) – the government will make a number of changes to simplify the ISA schemes, reduce complexity and widen the scope of investments that can be included in ISAs. The changes include allowing multiple subscriptions to ISAs of the same type every tax year from April‌‌‌ ‌‌2024. The government has also announced that it will be digitising the ISA reporting system to enable the development of digital tools to support investors
• removal of Self Assessment filing threshold for individuals with income over £150,000 which is taxed via PAYE – from tax year 2024 to 2025, individuals with an income of more than £150,000 which is taxed through PAYE will not be required to submit an Income Tax Self Assessment (ITSA) return, unless they have another reason to do so. This is in addition to the increase of the threshold from £100,000 to £150,000 which took effect in 2023 to 2024

Simplification

• Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) design changes – the government will make design changes to MTD for ITSA, simplifying and improving the system for taxpayers and their representatives. The requirement to provide an End of Period Statement will be removed and some taxpayers, including those without a National Insurance number, will be exempted from MTD. Taxpayers who are using MTD will be able to be represented by more than one tax agent. Draft regulations will be published for technical consultation later in 2023
• expanding the Income Tax cash basis – changes will be made to simplify the Income Tax cash basis that is available to self-employed people and partners for their trading income, making it more widely available. From the 2024 to 2025 tax year, the cash basis will be set as the default method of calculating taxable profits, with an opt-out for businesses that want to use the accruals basis

Tackling the tax gap

• Reliefs and Development (R&D) reliefs – restricting nominations and assignments – measures have been announced to further reduce non-compliance in the R&D tax reliefs. The government will restrict the use of nominations and assignments for R&D tax credit payments. This will stop payments being made to third party bank accounts with payments now having to go to those who are claiming
• investment in HMRC debt management capacity – HMRC is receiving additional investment of £163 million in our debt management capability to manage the elevated tax debt balance, ensuring taxpayers who need tailored support can get it and that outstanding tax debts are efficiently collected
• promoters of tax avoidance: director disqualification and a new criminal offence – the government will legislate in the Autumn Finance Bill 2023 to introduce a new criminal offence for promoters of tax avoidance who continue to promote avoidance schemes after receiving a Stop Notice. They will also legislate to introduce a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance