Autumn 2023 Statement
A few changes were announced by the Chancellor recently. We have summarised those most likely to affect you and your businesses below:
Impact on businesses:
Corporation tax rates will remain unchanged; details of these are shown here: www.millwardmay.co.uk/news/2023/5/18/corporation-tax-changes
National Living wages will rise to £11.44 per hour from April 2024. You can check that you are paying the correct amounts using the government calculator here: https://checkyourpay.campaign.gov.uk/
Capital allowance rules introduced in spring 2023 will remain enabling companies to claim 100% allowances on all qualifying plant and machinery
Research and Development reforms will come into place from April 2024. The RDEC and SME schemes will be merged and the rate will be set at 20% which is the current RDEC rate. This credit will then have corporation tax applied to it based on that of the recipient company. Therefore, businesses with over £50k profits, will effectively receive a credit at 15% whilst loss making ones will receive 16.2%.
For loss making R&D intensive SMEs, the 40% intensity threshold has reduced to 20%. Therefore, a loss-making SME company with qualifying R&D expenditure of 30% or more of its total expenditure from April 2024 may be able to claim the enhanced deduction of 86% and a payable credit of 14.5%. This results in a potential relief of 26.7% of the R&D expenditure for qualifying companies.
From April, R&D claimants will also no longer be able to nominate a third party payee for the tax credit payments.
Business rates will be frozen for small businesses for another year whilst the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25.
Impact on individuals:
Income tax rates will remain unchanged: basic rate – 20%, higher rate – 40% and additional rate – 45%. The personal allowance and basic rate limit are fixed at their current levels of £12,570 and £37,700 respectively with the point at which higher rate starts remaining at £50,270.
Dividend tax rates will remain unchanged: basic rate – 8.75%, upper rate – 33.75% and additional rate – 39.35%. As previously announced the dividend allowance will reduce from £1,000 to £500 from April 2024.
Class 1 National Insurance rates for employees will reduce from 12% to 10% from 6 January 2024.
Class 2 National Insurance for sole traders with profits over £6,725 will no longer be payable from 6 April 2024, saving £163.80 per annum. Those with profits under £6,725 who pay voluntarily will continue to be able to do so in order to access the benefits including the state pension at £3.70 per week from April 2024.
Class 4 National Insurance rates for the self-employed will reduce from 9% to 8% from 6 April 2024.
Pension changes previously introduced in 2023/24 will remain including:
An increased annual allowance of £60,000
Individuals with a “threshold income” over £200,000 will have their allowance restricted. It will be reduced by £1 for every £2 of “adjusted income” over £260,000. The minimum allowance is £10,000.
The lifetime allowance has been abolished from 2024/25.
State pensions will be worth up to £900 a year more than previously due to the government maintaining the triple lock.
Capital gains tax annual exemption will reduce from £6,000 to £3,000 from April 2024 as previously announced.
Making Tax Digital for small businesses will still come in from April 2026. The threshold at which this applies to small businesses and landlords is £30,000 and will be reviewed in future.