Autumn Statement completes unravelling of Kwarteng tax cuts
The Autumn Statement by Chancellor of the Exchequor Jeremy Hunt on 17 November concluded the unravelling of his predecessor’s business-friendly tax cuts of just eight weeks earlier (read more about that here).
Key tax announcements on 17 November include threshold and allowances measures, energy levy changes, changes to R&D tax reliefs, and reforms of business rates.
Threshold freezes and personal tax allowance measures
National Insurance contributions thresholds will be fixed at their current rates until April 2028. The government will legislate for the measure through secondary legislation early next year.
The National Insurance contributions secondary threshold will be fixed at £9,100 from April 2023 until April 2028. The Employment Allowance means the smallest employers will not be affected.
Energy Profits Levy (EPL) – from 1 January 2023, the EPL rate will rise by 10 percentage points to 35% and will be extended to 31 March 2028. The investment allowance will be reduced to 29% for all investment expenditure (other than decarbonisation expenditure) broadly maintaining its existing cash value. Decarbonisation expenditure will continue to qualify for the current investment allowance rate of 80%. The government will legislate for these measures in the Autumn Finance Bill 2022, except the changes related to decarbonisation expenditure which will be legislated for in the Spring Finance Bill 2023.
Corporate Tax changes
Reforms to R&D tax relief for expenditure on or after 1 April 2023 mean the Research & Development Expenditure Credit rate will increase from 13% to 20%, the Small & Medium-sized Enterprise (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. The government is continuing to review R&D tax reliefs, which were launched in the Budget of 2021, and will consult on the design of a single scheme.
Other measures include:
- Company Car Tax (CCT) Rates – the government is setting rates for CCT until April 2028 to provide long term certainty for taxpayers and industry in Autumn Finance Bill 2022
- Van Benefit Charge and Car & Van Fuel Benefit Charges – from 6 April 2023, Car and Van Fuel Benefit Charges and Van Benefit Charge will increase in line with the September 2022 Consumer Price Inflation (CPI) rate.
- A substantial package of reforms to business rates has also been announced and you can read the details on the government website here.