Limited companies: At the Spring Budget 2023, the super deduction regime was replaced with 'full expensing' for 3 years from 1 April 2023 (allowing companies to write off the full cost of qualifying plant and machinery investment against their taxable profits).
This change is now being made permanent with a 100% first year allowance for main rate assets and 50% first year allowance for special rate assets. Examples of special rate assets are long life assets, solar panels, electrical systems, etc.
This is of benefit only to larger companies as this the Annual Investment Allowance covers annual expenditure up to £1m anyway.
Sole traders & partnerships: The Annual Investment Allowance was previously confirmed at a permanent rate of £1m from April 2023.
Research & Development (R&D)
Following the changes to R&D Tax Reliefs from April 2023, a further change was made to loss making businesses and the two schemes are to be merged from April 2024.
Making Tax Digital (MTD)
Changes to simplify the design of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) from April 2026 were announced. The current MTD threshold turnover threshold of £50,000 from 2026 and £30,000 from 2027 will be maintained but there will be design changes which should hopefully simplify and improve the system.
The Investment Zones programme in England will be extended from 5 to 10 years, and three new zones were announced:
· Greater Manchester
· West Midlands
· East Midlands
Construction Industry Scheme (CIS)
Compliance with VAT obligations is to be added to the Construction Industry Scheme Gross Payment Status compliance test. The changes will also expand HMRC’s powers to remove Gross Payment Status immediately in cases of serious non-compliance. The majority of payments made by landlords to tenants will be removed from the scope of the Scheme from April 2024. Further information can be found on gov.uk.
For the retail, hospitality and leisure sector, the small business rates (SBR) relief 75% discount will be extended for a further year into 2024-25. In addition, the SBR multiplier will also be frozen for a further year.
Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT)
The EIS and VCT reliefs were due to expire after 5 April 2025; new legislation will be introduced to extend the lifetime of these reliefs to 2035.
Annual Tax on Enveloped Dwellings (ATED)
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. The ATED annual charges will be increased by 6.7% from 1 April 2024 in line with the September 2023 Consumer Price Index.
Electric vehicle charge points
The 100% First Year Allowance for electric vehicle charge points has been extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
The cash basis for unincorporated business is being extended from April 2024.
Personal tax thresholds have been frozen until April 2028 at the current levels. The additional rate threshold was reduced from £150,000 to £125,140 from 6 April 2023.
National Minimum and Living Wage
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. Rates for those aged 20 and under also increased.
Benefits in kind
The Van Benefit Charge and the Car & Van Fuel Benefit Charges are maintained at
2023-24 levels for 2024-25.
Reforming requirements to file a Self-Assessment tax return
The government will no longer require individuals with income taxed only through PAYE to file a Self-Assessment return from 2024-25.
Despite much speculation there were no announcements in the Autumn Statement relating to Inheritance Tax.
Capital gains tax
The capital gains threshold will be halved to £3,000 from 06 April 2024.
Employees: The main rate of Class 1 employee NICs will be reduced from 12% to 10% from 6 January 2024. Directors will have a hybrid rate of 11.5% for 2023/24. This change might cause one or two problems as, with the Christmas break approaching, it does not give software developers much time to amend systems in time. Whilst this is great news for workers, there was no reduction for secondary employer contributions but the employment allowance continues at the current level of £5,000.
Self-employed: Unfortunately, the rate of Class 4 NICs paid by the self-employed will only be reduced by 1%, rather than the 2% reduction in employee contributions. The rate is to be cut from 9% to 8% from 6 April 2024.
Class 2 NICs, paid at a flat rate of £3.45 a week by the self-employed with profits above £12,570 will be abolished from 6 April 2024. However, access to contributory benefits, including the State Pension will be maintained. Those with profits between £6,725 and £12,570 will continue to access benefits above through a National Insurance credit without paying NICs as they do currently. Those currently paying voluntarily will still be able to do so at the same rate.
The thresholds when you start to pay National Insurance remain unchanged.
The lifetime pension allowance charge is to be abolished entirely from April 2024. Whilst the lifetime allowance removal might be welcomed by many, it appears that it could be restored if there is a change of government. If you are affected by this, please seek appropriate advice from a financial adviser.
The pension contribution annual allowance increased from £40,000 to £60,000 from April 2023. Money purchase annual allowance increased from £4,000 to £10,000, which applies if you have already started drawing a pension.
Employees changing jobs regularly can have many “small pot” pensions. The government are looking into a lifetime provider model allowing workers to have contributions paid into their existing pension scheme when they change employment.
Whilst this would be a simplification for individuals, it may present an administrative challenge to small businesses.
State Pension Triple Lock
The Government will maintain the “triple lock”. From April 2024, the full new state pension will increase by 8.5% to £11,500 per year, an increase of over £900. With increased interest rates, this could mean many more pensioners having to pay tax on their pension and savings income.
Individual Savings Accounts (ISAs)
The subscription limits remain unchanged at £20,000, £9,000 and £4,000 for ISAs, junior ISAs and lifetime ISAs respectively
Other Significant Announcements
Free childcare for working parents (subject to eligibility) is being phased in, giving 30 hours of free childcare for children over nine months old for 38 weeks of the year.
Geographical scope of agricultural property relief and woodlands relief from inheritance tax
The scope of agricultural property relief and woodlands relief is to be restricted to property in the UK only from April 2024.