Autumn Statement 2023 Summary from Butt Miller Chartered Accountants
Listening to Jeremy Hunt’s Autumn statement speech on Wednesday 22nd I kept getting the feeling I had heard it all before. Sure enough, when I checked our blog from March, the key notes for the 2023 Budget speech included growth, a focus on getting the unemployed back into work and promotion of the new Freeports as well as the “full expensing” of equipment costs.
Whether this exposes a lack of new ideas or is an indication that the Government is comfortable with its big plans only time will tell. If I have ended up repeating myself from earlier in the year, please don’t forget I am just the messenger!
Having said that, there are some surprise giveaways, such as the cuts to National Insurance, which will surely be grabbing the headlines, not least because the reduction for employees is being rushed through before the end of the tax year. If I was a cynic I would be linking this cut to the prospect of a General Election in the next 6 to 12 months. This change brings in the lowest rate of Employee NIC in 20 years. I did sit waiting for the rate of NIC that employers are required to pay to be reduced as well, but no, that didn’t happen.
The Self Employed will also benefit from a reduction in the rate of NIC that applies to their profits in excess of the personal allowance, by just 1%, but they also no longer have to pay the Class 2 contribution or “stamp” that has historically been the gateway to contributions based State benefits from April 2024. At just £3.15 a week Class 2 has become uneconomical to administer and it is probably past time the system was overhauled.
The press release takes pains to confirm that the self employed will continue to be able to access the State benefits to which they have been contributing. Class 2 contributions have been collected through Self Assessment for a number of years, which has caused those approaching retirement or seeking to claim Maternity benefit a headache as the contributions did not hit their records until up to 12 months after the tax year. The wording in relation to those who are currently paying Class 2 on a Voluntary basis is somewhat vague, but hopefully the position should be clarified in the coming weeks.
“Full expensing” for equipment costs was again front and centre, but as I said in March, the Annual Investment Allowance of £1 Million is more than adequate to cover the investment needs of the majority of businesses, so perhaps it’s not that big a deal when it’s irrelevant to 90% of UK companies. The continued clamp on business rates is more helpful to a struggling business, but does only apply to the retail and leisure sector so benefits only a proportion of businesses.
There has been some tinkering with the R&D tax credits regime which increases the tax deduction for the cost of undertaking research and development projects already and today’s announcement of a merger of the two schemes that are currently in place so that small companies and large companies will be dealt with in the same way in future was no surprise.
Proposed relaxation of rules around ISA funds and a plan to enable workers to have a single pension pot in their lifetime are positive moves giving more flexibility to savers but, again, we need more details to fully understand the implications.
Tackling delays in obtaining Planning permission seems to also be taking up a lot of air space in this statement, and will be welcomed by those operating in the construction industry. Hunt referenced proposals to introduce an accelerated planning process for large projects, with Councils effectively facing a penalty clause for failing to meet a deadline for the process as they would be required to refund any fees paid. It does occur to me that the average Joe could be adversely impacted by this approach as Councils will be inclined to prioritise the big players ahead of individuals and smaller businesses to protect their own income streams.
Aside from what was mentioned in the speech, there were also some little nuggets hidden away in the press release.
There is a commitment to making HMRC more efficient at collecting taxes, including reducing staffing to pre-pandemic levels, but no detail about what that actually means.
HMRC will be issuing new guidance about tax deductions for training costs for the self employed. This has been an area of great confusion for some time and the subject of some substantial court cases in recent years. I am reading this as a problem with HMRC’s explanations of what you can claim rather than increasing the relief the self employed can claim. The difficulty with HMRC re-writes is that it can be a way of completely changing their stated position on how things are dealt with in practice so we will be keeping an eye out for the final version when that is published.
The tax profession breathed a sigh of relief at the announcement of the further delay to Making Tax Digital earlier this year and most of us were hoping that it would quietly disappear into the black hole reserved for poorly thought out ideas. However, I spotted that the MTD launch is still proposed for businesses, including landlords, turning over £50,000 from 2026. As that deadline approaches we will be keeping you updated on any action you need to take.
The one liner “The government will no longer require individuals with income taxed only through Pay As You Earn to file a Self Assessment return from 2024-25”, buried on page 97 of the press release triggered my inner tax nerd. The law on Self Assessment has always said that you don’t need to do a return if your only income is taxed through PAYE, so I take the statement to mean HMRC are finally taking notice of the Courts’ regular rebukes to them making up their own rules.
The devil is of course always in the detail with tax, and guidance will be coming out in the coming weeks which will hopefully clear up any uncertainties.
We will of course be happy to help with any questions you may have, please do give us a call.