Key highlights for small and medium-sized businesses from the UK's autumn statement 2023

From the 6th of January 2024, the main rate of primary Class 1 National Insurance contributions will drop from 12% to 10%. For self-employed folks, the main rate of Class 4 contributions will reduce from 9% to 8% from the 6th of April 2024. The good news is that there’ll be no more Class 2 NICs for self-employed individuals with profits above £12,570 from 6th April 2024.​

As discussed in the Spring Budget 2023 and starting from 6th April 2024, the government is getting rid of the Pensions Lifetime Allowance. This move aims to make lump sum taxation clearer and fairer.​

From 6th April 2024, new rules will help reduce the PAYE tax liability for employers who mistakenly treated engagements as self-employed. This ensures fair treatment for tax and National Insurance contributions already paid.​

The income tax cash basis is expanding, making it the default method for small businesses operating as sole traders or partnerships. Restrictions of its use based on turnover, interest, and loss relief will disappear as of 6th April 2024. ​

Read more: The difference between accrual and cash accounting​

HMRC is providing some clarification on what training costs are deductible for tax purposes, ensuring that businesses can confidently claim costs for updating skills or keeping up with industry changes. ​

Full expensing is a tax benefit that allows businesses to deduct the entire cost of certain investments in plant and machinery from their taxable income in the first year of purchase. The Autumn Statement made this "full expensing" permanent, removing the initial expiry date of 31st March 2026. This is great news for businesses since it allows a significant upfront tax deduction for investment in certain capital expenditure. Specific rules and criteria apply, so consulting with a tax professional is recommended to ensure the proper utilisation of these tax benefits.​

From the 1st of April 2024, a new, simpler scheme is merging R&D Expenditure Credit (RDEC) and R&D SME schemes. The rate offered under the merged scheme will be implemented at the current RDEC rate of 20%. The national tax rate applied to loss-makers in the scheme will be the small profit rate of 19%.​

In addition, enhanced support will be available for R&D-intensive SMEs, providing a higher rate of payable tax credit. The intensity threshold will be reduced from 40% to 30%. This will also be starting from the 1st of April 2024.​

On the 6th of April 2024, the national living wage is set to increase to £11.44 per hour. This is a noteworthy adjustment as it reflects a £1.02 increment from the existing rate of £10.42. ​

Starting 6th of April 2024, compliance with VAT obligations will now be part of the Construction Industry Scheme Gross Payment Status test. HMRC will have more power to remove Gross Payment Status immediately for serious non-compliance.​

Good news for businesses! The time limit to notify HMRC about EMI options is extending from within 92 days of the grant to 6th July after the tax year in which the grant happened. This change kicks in from the 6th of April 2024. Head to HMRC’s website to learn more about Enterprise Management Incentives.​

From the 2025 to 2026 tax year, expect changes in reporting. Employers, company directors, and self-employed folks will be expected to provide additional data to HMRC for better outcomes. Watch this space for further details!​

Design changes to MTD for Income Tax Self Assessment aim to simplify requirements and remove the need for an End of Period Statement. Some taxpayers will be exempt and representation by multiple tax agents will be allowed.​

Read more: Understanding making tax digital by HMRC​

Stay tuned for more updates and remember, if you have any questions or concerns, reach out to our expert team – we're here for you!​

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