With predictions of an overhaul to the capital allowance regime not being introduced and the prior announcement of the main rate of corporation tax remaining at 25% (after various U-turns), the Autumn Statement turned out to be quite mild on the business tax front.
Below is a summary of the announcements made.
Investment in Research & Development
Jeremy Hunt has vowed to turn Britain into the next Silicon Valley in his Autumn Statement with an increase of funding in research and development to £20 billion by 2024-25.
There will also be work carried out to see if a change in regulation would better support the safe and fast introduction of emerging technologies with the aim of turning world class innovation into world class companies.
Research & Development Claims
Along with the above announcement, an increase to the R&D relief available for large companies claiming under the RDEC scheme was announced increasing relief from 10.53% up to 1 April 2023 to 15% from 1 April 2023.
There was however a reduction to the amount of relief a small or medium company can claim (broadly those with less than 500 employees). The previous enhanced deduction claimable under the SME scheme was 130% of qualifying expenditure and this has now been reduced to 86%.
For further information on these changes, click here to read our blog.
Business Rates
The government announced a £13.6 billion tax cut on business rates which is estimated to benefit 700,000 businesses. The measures include:
- Freezing the business rates multiplier for another year to protect businesses from rising inflation, worth £9.3 billion over the next 5 years
- An extended and increased relief for retail, hospitality and leisure businesses worth almost £2.1 billion. This is the most generous in year business rates relief in over 30 years, outside of Covid-19 support.
- Reforming Transitional Relief so for businesses seeing lower bills as a result of the revaluation, the government will make sure they benefit from that decrease in full straight away, by abolishing downwards transitional reliefs caps. The government also announced a £1.6 billion scheme to cap bill increases for businesses who will see higher bills as a result of the revaluation.
- Protection for small businesses who lose eligibility for either Small Business or Rural Rate Relief due to new property valuations through a more generous Supporting Small Business scheme worth over £500 million.
This package means that the total increase in business rates bills will be less than 1%, compared to over 20% without intervention.
Annual Investment Allowance
It was also announced that the current £1 million annual investment allowance will remain at that level permanently in a bid to provide stability to businesses investing in qualifying plant and machinery.
VAT Threshold
The VAT threshold will remain frozen at the current level of £85,000 until March 2026.
Employment allowance
The employment allowance will be retained at the higher level of £5,000 which was introduced in April 2022.
Electric Cars
From April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles. This will have the following impact:
- new zero emission cars registered on or after 1 April 2025 will be liable to pay the lowest first year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year. From the second year of registration onwards, they will move to the standard rate, currently £165 a year.
- zero emission cars first registered between 1 April 2017 and 31 March 2025 will also pay the standard rate
- New electric cars from 1 April 2025 costing in excess of £40,000 will be required to pay the expensive car supplement which is currently £355 per year on top of the normal VED banding.
Company Car Tax
The benefit in kind rate for company cars will also be increased whilst retaining the incentive for the take up of electric vehicles:
- appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025-26, a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars
- rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.
If you have any questions or require any further detail on the above changes, please get in touch on 0333 1237171.
