Will the Autumn Statement 2023 have any impact on you and your business?

 

We have highlighted a few points from the Statement that may be of interest to our clients. 

 

Merging R&D Schemes

In April 2024, R&D tax credits for SMEs will officially be merged with the Research and Development Expenditure Credit (RDEC).

The rate of relief for the new merged scheme is 20% of R&D expenditure, which translates into a net benefit of 15%, assuming the company pays corporation tax at the 25% main rate.

Although the definition of R&D has not changed and the same types of companies can apply for relief, we understand that this change may lead to some uncertainty.

 

“Full Expensing” Made Permanent

“Full Expensing” enables business owners to claim up to 25p corporation tax exemption on every £1 they spend on IT, machinery, and equipment.

For many businesses in the UK, this could effectively mean a substantial permanent tax cut.

 

More Funding for UK Manufacturers

To encourage growth in key industries, the government has earmarked £4.5 billion for strategic manufacturing sectors”.

This will include:

  • £975M for the aerospace sector
  • £960M for green industries
  • £520M for life science businesses

 

Reductions to National Insurance – NI

From January 2024, the main rate of Employee National Insurance will be reduced from 12% to 10%.

For someone earning an average salary of £35,000, this will mean a saving of £450 per year.

Reductions to Class 4 and Class 2 National Insurance will also benefit the self-employed, amounting to a £350 tax cut for a self-employed person earning £28,200 per year.

However, it’s important to note that both income tax and NI thresholds will remain frozen until 2028.

If you start to earn more, you run the risk of entering a higher tax band.

 

National Living Wage increase

The UK National Living Wage is to be increased in April 2024 from £10.42 per hour to £11.44 per hour for all those over 21 years old.

 

If you have questions about any of the new policies introduced in the Autumn Statement, please feel free to get in touch with a member of our team.