Autumn Budget November 2023
On Wednesday, 21st November, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, delivered the Autumn Budget November 2023, outlining key tax measures aimed at bolstering economic growth by supporting British businesses and increasing employment. As your trusted financial partner, I’d like to share some insights from an accountant’s perspective.
The government remains steadfast in its commitment to simplifying the tax system, focusing on four key objectives:
1. Clear and Consistent Rules: Ensuring tax rules have a transparent and consistent rationale for easy understanding.
2. Proportionate Compliance: Easing the burden of compliance and administration for taxpayers and HMRC.
3. Informed Taxpayers: Ensuring taxpayers understand their obligations and options, particularly at key lifecycle points.
4. Avoiding Distortion: Preventing tax policies from unnecessarily influencing taxpayers’ decisions and resulting in poorly informed choices.
The Autumn Budget November 2023 addresses various aspects, including:
Business Tax:
- Capital Allowances Permanent full expensing, making the 50% first-year allowance and full expensing for main rate expenditure a permanent feature.
- Tax Reliefs – Enhanced support for R&D-intensive SMEs, extension of freeport tax reliefs, and administrative changes to creative industry tax reliefs.
- Tax Treatment of Remote Gambling – A consultation on proposals to streamline remote gambling taxation into a single tax structure.
Personal Tax:
- National Insurance Contributions (NICs) – Changes include a reduction in Class 1 NICs from January 2024, lower Class 4 NICs for self-employed from April 2024, and adjustments to NICs rates.
- Individual Saving Account (ISA) – Simplifications and digitisation of the ISA reporting system, allowing multiple subscriptions of the same type per tax year from April 2024.
- Self-Assessment Filing Threshold – Removal for individuals with income over £150,000, in addition to the threshold increase from £100,000 to £150,000 in the previous tax year.
Simplification:
- Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) Design Changes Improvements to MTD for ITSA include removing the End of Period Statement requirement and exemptions for certain taxpayers.
- Expanding the Income Tax Cash Basis – Simplifying the cash basis calculation for taxable profits, set as the default method from the 2024 to 2025 tax year.
Tackling the Tax Gap:
- R&D Reliefs – Measures to reduce non-compliance, restricting nominations and assignments for R&D tax credit payments.
- Investment in HMRC Debt Management – Additional investment of £163 million to enhance debt management capability and efficiently collect outstanding tax debts.
- Promoters of Tax Avoidance – Introducing a new criminal offence for promoters of tax avoidance and empowering HMRC to take disqualification action against directors involved in promoting tax avoidance.
Increase in National Minimum Wage
On November 21st, it was officially confirmed that the national minimum wage is set to rise in April 2024, marking the most significant increase to date. Notably, the national living wage will now encompass individuals aged 21 and above, a change from the previous threshold of 23. The confirmed breakdown is as follows:
- Age 21 and above: £11.44 – a substantial 9.8% increase
- Age 18-20: £8.60 – a notable 14.8% increase
- Age 16-17: £6.40 – a substantial 21.2% increase
- Apprenticeship Rate: £6.40 – a significant 21.2% increase
As numerous small businesses grapple with ongoing post-pandemic challenges, including escalating overall costs, this announcement could profoundly impact their financial recovery. It may necessitate further efforts to trim costs and maintain viability in the face of these economic challenges.
As your dedicated accountants, we are here to guide you through the changes of the Autumn Budget November 2023 and ensure your financial strategies align with the evolving landscape. Feel free to reach out for personalised assistance.
