Autumn Statement 2023
The Chancellor intended this statement to be all about the cuts in National Insurance that are welcome and have been widely reported. However, rather quicker than usual, commentators moved on to the wider tax raising momentum. My blog from the Autumn statement 2022 sets out the tax increases which are again being highlighted.
There are many welcome measures as follows:
- Pension increase of 8.5%
- Alcohol duty frozen
- AI Innovation centres
- Permanent extension of First Year Allowances, AKA Full Expensing
- Business Rates Relief
- MTD simplifications
However, there are also some less welcome measures as follows:
- Pension reforms where an employer must interact with an employees nominated pension provider.
- Changes to the R&D relief again
- A change to NI midyear ignoring the costs to employers for political gain.
The other announcements likely to affect our clients are:
Off Payroll (IR35)
The ability for large organisations to use a smaller organisation tax payments for corporation tax and Income Tax (on dividends) highlights the bias against smaller businesses in this legislation since 1999.
R&D Changes
There will be welcome changes to the ability to pay any credits to third parties to reduce noncompliance in this area. Less helpful though are the significant changes from 1/4/24 leaving little time for claimants to adjust to ensure they remain eligible. For loss making R&D intensive businesses these changes may be key to survival.
MTD ITSA
Initially income over £10,000 from property on self-employment meant approximately 4.5 million tax payers would have been forced to do quarterly Tax returns. This has now been amended to £30,000 from April 2027 (£50,000 from April 2026) so closer to 2 million taxpayers. Software providers are reluctant to commit resources in an ever changing landscape.
Conclusion
The additional burdens on businesses are clearly unwelcome and do not incentivise growth. When combined with the increased tax burden the concern is that any growth will be slow. A reduction in red tape and taxation rather than increases in both would provide the results the Chancellor is championing.