Top implications for businesses and individuals – Autumn Statement 2023

It is a truism of parliamentary fiscal announcements that they are made in the context of the election cycle. Here, with an election no more than 14 months away, this is very much the case.

There is no doubt that the Chancellor was carefully picking his comparator time frames to reflect well on both the Prime Minister and himself. Inflation (at 4.6%) is half what it was when the Prime Minister and himself took over last autumn. It is still about 3 times what it was when the Chancellor before the last one took over (1.7%). That Chancellor is now the Prime Minister.

So, we are in the time frame of two boxers circling each other, knowing there are still twelve rounds to go.

Some structural changes may well be helpful – full expensing of most capital costs will be very helpful to the largest businesses, but is only of benefit to companies investing more than £1m per year. This was hailed as the largest tax cut for businesses since the 1980s, but the fact that Corporation Tax increased from 19% to 25% in April 2023 should not be forgotten. The merger of two separate R&D tax relief schemes should simplify matters and remove some anomalies.

The increase in the National Living Wage by over 9% from April 2024 will bring a welcome increase in cash for the lowest paid, but will be a real cost to business.

National Insurance reductions will also give cash increases to all in employment and the self-employed. The pension triple lock has been maintained with increases targeted to average wage growth at 8.5% (albeit with other benefits increases tied to the level of CPI in September of 6.7%).

It remains to be seen if the Chancellor has any rabbits to pull out of his hat before the election. Depending on the date of the election, the Spring Budget could be his last chance.

However, the Chancellor’s most important announcement was his first one; he remembered his wife’s birthday – it was today!

What are the top implications for individuals and businesses?

For individuals:

• National Insurance changes for both employees and the self-employed.
• Making Tax Digital for Income Tax Self-Assessment.

Daniel Grainge, Partner and Head of Tax, comments; “Apart from the reductions in National Insurance, which will mean a tax saving to employees of up to £750 per year, and £550 for the self-employed there were no other changes to personal tax. We will have to wait and see if there are any more significant changes, particularly to Income Tax and Inheritance Tax, in the Spring Budget”.

For businesses:

• Permanent full expensing relief for companies
• Further R&D reform including merging the current RDEC and R&D SME schemes
• Updates on National Living and Minimum Wage

Sam Jones, Corporate Tax Partner, comments: “There are few tax changes that will affect the majority of businesses. However, those that are, will be affected significantly. If a large proportion of your employees are on the national living wage, this may have a big impact. Similarly, those companies who have historically made material R&D claims under the SME scheme may not be getting such a cash flow benefit in the future. As always, seek advice on your specific circumstances”.

Our Autumn Statement 2023 question time webinar is now available to watch on-demand. During the webinar, our panel of tax and business experts came together to examine the changes unveiled by the Chancellor, and to answer your questions. Click here to watch the webinar.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.