Class 1 employee NICs are to be reduced by 2 percent from 12 percent to 10 percent from 6 January 2024. The NICs payable by the self-employed will also be reduced. From 6 April 2024, the main rate of Class 4 NIC, which is applied to trading profits between £12,570 and £50,270, is being reduced by 1 percent from 9 percent to 8 percent. And Class 2 NIC is being abolished from 6 April 2024. From the same date, self-employed taxpayers with profits above £12,570 who will no longer be required to pay Class 2 NICs, will continue to receive access to contributory benefits, including the State Pension. Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit without paying NICs as they do currently. Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits will continue to be able to do so. The government will set out next steps on Class 2 reform next year. Broadly, the cuts to Class 4 and Class 2 NIC together amount to a tax saving of £350 a year for the average self-employed person on £28,200. According to official documents, it’s expected that some 2 million self-employed individuals will benefit.

Continuing with the theme of reform to the UK’s R&D tax relief regime which began in the 2022 Autumn Statement, the SME and large company regimes are to be merged, as planned, from 1 April 2024. However, the Chancellor did not specify the rate(s) of relief which will be available under the merged scheme, which is likely to be announced in the 2024 Spring Budget. In our submission to the House of Lords Finance Bill Sub-Committee inquiry into draft Finance Bill 2023/24, Chartered Accountants Ireland recommended that the commencement date for the introduction of a single unified scheme be deferred beyond 2024 to allow for a longer period of consultation to be undertaken on the potential options available. Other changes to the R&D tax relief regimes were also announced today. The intensity threshold in the R&D intensives scheme is to be reduced from 40 percent to 30 percent for accounting periods that commence on or after 1 April 2024. A one-year grace period will also be introduced which will allow companies who dip under the 30 percent threshold to continue to receive relief as an R&D intensive company for a further year. More details of the changes to R&D tax relief announced are available in a HM Treasury policy paper with confirmation that all changes come into effect in respect of accounting periods beginning on or after 1 April 2024.  

Full expensing was announced in the 2023 Spring Budget and replaced the 130 percent super deduction which came to an end on 31 March 2023. The relief is only available to companies incurring expenditure on new plant and machinery (with some exclusions) and was originally scheduled to last for a three-year period until 31 March 2026. The Chancellor announced today that full expensing is being made permanent.  Although this is being badged as the biggest tax cut in modern British history, in reality it is only of real benefit to larger companies who have the capacity to invest in more than their annual investment allowance limit, which already provides 100 percent relief for such assets, up to a maximum of £1 million.

Although not featured in the Chancellor’s speech, buried in the Autumn Statement 2023 publications is the outcome of HMRC’s recent small business review. This comprises what is referred to as a “package of changes to simplify the design of Making Tax Digital”. A separate corporate report with more detail was also published which provides details of further work and next steps. The package of changes announced includes maintaining the current MTD turnover threshold at £30,000 and design changes which aim “to simplify and improve the system”. These changes will take effect from April 2026 when MTD for income is initially scheduled to commence for self-employed business and landlords with turnover of more than £50,000. Earlier this year, Chartered Accountants Ireland met with HMRC to discuss the review and highlighted several concerns, including the need for HMRC to increase the exemption threshold. We are pleased to see that HMRC has decided, at present, to maintain the turnover limit at which MTD will be mandated to £30,000, effectively increasing this from the original exemption limit of £10,000. Taxpayers with turnover from £30,000 to £50,000 are still mandated to join MTD from April 2027. However, the government will keep under review the turnover less than £30,000 population. These changes specifically:- simplify the requirements for all taxpayers providing quarterly updates, and for taxpayers with more complex affairs, such as landlords with jointly owned property; remove the requirement to provide an End of Period Statement; exempt some taxpayers, including those without a National Insurance number, from MTD; and enable taxpayers using MTD to be represented by more than one tax agent.      

In Irish news, the Institute wants to hear members views on the proposal for real-time digital reporting of VAT, while Revenue  has provided contact details for platform operators with DAC7 registration queries and it is to hold a further webinar on the Enhanced Reporting Requirements for employers. In UK news, this week’s miscellaneous updates brings news about the publication of new Guidelines for Compliance for R&D tax relief claims. In International news, the European Commission has published the Autumn 2023 Economic Forecast which shows that the European economy has lost momentum. Ireland Revenue’s public consultation on real-time digital reporting for VAT – we want to hear from you. Revenue has provided useful contact information for DAC7 registration and filing queries for platform operators that are obliged to register with Revenue by 30 November 2023. Revenue is holding an online webinar on Thursday 30 November on the Enhanced Reporting Requirements (ERR) for employers which is scheduled to commence from 1 January 2024. UK Read about the new Guidelines for Compliance in respect of R&D tax relief claims. International The European Commission has published the Autumn 2023 Economic Forecast which shows that the European economy has lost momentum. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here.

The European Commission has published the Autumn 2023 Economic Forecast which indicates that the European economy has lost momentum this year against the background of a high cost of living, weak external demand and monetary tightening. Although economic activity is expected to gradually recover, the Autumn Forecast revises EU GDP growth down compared to its summer projections.

The OECD is to publish Corporate Tax Statistics 2023 tomorrow Tuesday 21 November, alongside a new working paper on effective tax rates of multinational enterprises. The publication provides comprehensive insights into corporate tax systems and the tax and economic activities of thousands of multinational enterprises operating around the world.

The OECD is to publish new evidence on global low-taxed profit of multinational enterprises (MNEs) as part of its series of OECD Taxation Working Papers. Using a new dataset on the global activities of large MNEs, the paper provides new estimates of the distribution of effective tax rates of large MNEs across and within jurisdictions.  The results show that low tax profit is common, and that substantial low-taxed profits exists outside low tax jurisdictions.

Kuwait has joined the OECD/G20 Inclusive Framework on BEPS, an international collaboration with over 140 member countries and jurisdictions. Kuwait will participate in the implementation of the Two-Pillar Solution to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment.

Revenue has updated the Tax and Duty Manual regarding Securitisation Regulation: Notification of Investment following publication of the updated EU list of non-cooperative jurisdictions for tax purposes on 23 October 2023. The updated manual reflects the revised list, with relevant examples, and links to official journals of the EU also updated.

Revenue has published an updated Tax and Duty Manual to provide information for PAYE taxpayers on how to review their tax using MyGovID or MyAccount. The screenshots and guidance on the Employment Detail Summary have also been updated.

Later this week, Chancellor Jeremy Hunt will deliver his second Autumn Statement on Wednesday 22 November. On the day, the Institute will be reporting on key tax announcements with detailed analysis to follow in next Monday’s Chartered Accountants Tax News. It has also been confirmed that the 2024/25 Scottish Budget will take place on 19 December 2023 and the Welsh Government has announced that it is planning to publish the outline and detailed draft budgets on 19 December 2023, with the final Budget scheduled for 27 February 2024. In last week’s cabinet reshuffle, Nigel Huddleston MP was appointed as Financial Secretary to the Treasury.  The recent King’s speech provided little insight into what the government’s future tax policy may look like, though perhaps this is not unexpected as a UK general election looms in 2024. However, one thing we do expect to hear about on Wednesday is the outcome of HMRC’s review into Making Tax Digital for income tax for the smallest businesses. Earlier this year, Chartered Accountants Ireland met with HMRC to discuss the review and highlighted several concerns, including the need for HMRC to increase the exemption threshold.