Against the backdrop of the Government meeting its own target to reduce inflation below 5 percent in the final three months of 2023, and a more optimistic economic outlook from the Office for Budget Responsibility, last Wednesday Chancellor Jeremy Hunt delivered his second Autumn Statement. With one eye squarely on the General Election expected to take place in 2024, the main focus was on announcing some tax cuts via reductions in national insurance contributions and confirmation that full expensing for companies, which provides 100 relief for new investments in plant and machinery, is being made permanent. Mr Hunt also further reformed the UK’s R&D tax relief regimes which will be merged into one scheme from 1 April 2024. It was also confirmed that, for now, the turnover exemption limit for Making Tax Digital for income tax will not be reduced below £30,000. The need to increase the exemption limit from its original level of £10,000 has been a long-standing recommendation of Chartered Accountants Ireland since 2016.
But will taxpayers be fooled by the tax cuts announced last week? Fiscal drag created in recent years by the freezing of numerous tax allowances and thresholds means that for many taxpayers, the cash benefit of any NICs reduction is likely to have already been outweighed by the additional tax that they are already paying because of frozen allowances/thresholds. However, a cut to income tax in the Spring 2024 Budget has not been ruled out.
After the closure of the Office of Tax Simplification, the Government also provided details of its four main objectives in this area (see page 77 of the main Autumn Statement publication) and will set out progress on these metrics before the end of 2023/24. Several specific announcements were also made which aim to make it easier for small businesses to set up and grow – more detail of these is contained in the business taxes story.
Read the Institute’s Press Release reacting to the Autumn Statement. The analysis herein is based on the publications of HMRC and HM Treasury and various emails and bulletins received by the Institute last week.
Next Monday’s Chartered Accountants Tax News will feature our final stories on the 2023 Autumn Statement and will cover an update on Pillar Two, proposals to tackle the tax gap and a range of other miscellaneous measures, including a number of VAT changes.
LOADING...