27 November 2023

Autumn Statement 2023: Ocorian's Response 22 November, 2023



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The UK Chancellor of the Exchequer has today announced 110 measures designed to promote financial growth in the UK. There had been much speculation as to what might be included in his Autumn...
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The UK Chancellor of the Exchequer has today announced 110 measures designed to promote financial growth in the UK. There had been much speculation as to what might be included in his Autumn Statement, including in recent weeks the possibility of tax cuts. This article from Tracey Neuman, Private Client Executive, delves into the key highlights and implications of the announcement, addressing both anticipated and unexpected measures.

Key takeaways from the Autumn Statement 2023

1. National Insurance Contributions cuts

One of the speculated tax cuts was to National Insurance Contributions (NIC), which was paid by workers and employers in the UK. The main rate of NIC is to be reduced from 12% to 10% with effect from 6 January 2024. Class 2 NIC, which are paid by the self-employed are to be abolished and the rate of Class 4 NIC, also paid by the self-employed, is to be reduced from 9% to 8%. However, there was nothing on the much-touted potential changes to inheritance tax, which the Government had said they wanted to abolish. Could they be keeping this in reserve for the Budget in the spring to potentially give them a pre-election boost?

2. Remittance basis of taxation

Some commentators were also expecting the announcement of a consultation on the remittance basis of taxation. The Labour party have said they would abolish the beneficial tax treatment for non-UK domiciled individuals and replace it with a form of temporary residence tax relief. This is an area of immense complexity and arguably, a simplification would be welcome. Again, this is an area to watch this space and potentially start thinking about possible planning steps.

3. Permanency of full expensing for business

What is clear from the Autumn Statement is the Government's desire to increase economic growth, largely via business investment. The main announcement was to make full expensing permanent for business. When initially introduced it was only going to be available for three years. Very broadly, this allows a business to claim 100% first year allowance for expenditure on plant and machinery. There is also a 50% first year allowance for certain other categories of expenditure. This combined with the UK corporation tax rates, gives UK companies one of the lowest effective rates of tax in Europe and arguably, makes the UK a very attractive jurisdiction to establish and run a business.

4. Extended tax reliefs for business growth

To further support the desire for business growth certain tax reliefs have been extended. Income tax relief for individuals who invest in qualifying EIS or VCTs has been extended so that it will apply to shares issued up to 6 April 2035 – a further ten years. In addition, the exemption from stamp duty and stamp duty reserve tax on shares on recognised growth markets has been extended, as the conditions to qualify as a recognised growth market have been relaxed. Certain business reliefs will also be simplified. Again, this further highlights the Government's desire for the UK to be seen as a good place for business.

5. Strengthened HMRC measures

It is also worth noting that HMRC is to be given increased resource to make sure everyone pays what they should. This is supported by a number of additional measures, including the increase in the maximum prison term for tax fraud to 14 years from 7 years and a new criminal penalty for promotors of tax avoidance schemes, where stop notices have been issued. HMRC will also be given access to more detailed information, by way of three new measures which require businesses and individuals to provide further information on pay relating to hours, dividends from owner managed businesses and the start and end dates of self-employment.

6. Unaddressed concerns for high-net-worth individuals

Whilst the provision for business is likely to be welcome, many of the direct concerns for the high net wealth community have not been addressed. These concerns will not go away, particularly given the election next year. As always, it will remain important to keep structures under review.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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