Reports: Business tax updates from the Autumn Statement
After what can only be described as an unprecedented period of disruption, new Prime Minister and Chancellor of the Exchequer Jeremy Hunt today, November 17, made the official Autumn Statement 2022, outlining plans to stabilise and grow the economy.
The key objectives for HM Treasury are to reduce national debt as a proportion of the economy over the medium turn, reducing debt servicing costs and leaving more money to invest in public services.
To achieve this, the government has reversed nearly all the measures outlined in the Growth Plan 2022, and the Autumn Statement set out further steps on taxation and spending. Each of the aforementioned will almost equally contribute to repairing public finances, and it’s thought the Autumn Statement policy decisions will begin to reduce borrowing from 2024 – 25 when the economy is in recovery and unemployment begins to fall.
Here are key business tax announcements.
- The 1.25% Health and Social Care Levy will not be introduced as a separate tax next year as planned – or, more simply put, the increase was reversed this past November (2022)
- The NI Secondary Threshold for employers will be maintained at £9,100 from April 2023 to April 2028
The government will legislate for this measure in affirmative secondary legislation in early 2023
- As previously confirmed the planned increase in Corporation Tax to 25% for companies with over £250,000 in profits will go ahead in April 2023
- A 19% Small Profits Rate will be introduced at the same time; the Treasury is estimating that 70% of trading companies will, therefore, not see an increase in the rate of CT paid due to the SPR
- The government will implement the OECD Pillar 2 rules, to deliver a global minimum corporate tax rate of 15% for accounting periods beginning on or after 31 December For accounting periods beginning on or after 31 December 2023 the government will:
- Introduce an Income Inclusion Rule (IIR) which will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%
- Introduce a supplementary Qualified Domestic Minimum Top-up (QDMTT) tax rule which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%
This will be legislated for in Spring Finance Bill 2023.
The government intends to implement the backstop Undertaxed Profits Rule in the UK, but with effect no earlier than accounting periods beginning on or after 31 December.
Diverted Profits Tax
- From April 2023, the rate of Diverted Profits Tax will increase from 25% to 31%. This ensures a 6% differential above the main rate of Corporation Tax acting as an effective deterrent against diverting profits out of the UK
- Business rates multipliers will be frozen in 2023-24 at 9 pence and 51.2 pence, preventing them from increasing to 52.9 pence and 54.2 pence
- Support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24.
- Bill increases for the smallest businesses losing eligibility or seeing reductions in SBRR or Rural Rate Relief (RRR) will be capped at £600 per year from 1 April 2023
- At Autumn Budget 2021 the government announced a new improvement relief to ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they This will now be introduced from April 2024 until 2028, at which point the government will review the measure
- Tariffs on over 100 goods will be removed for two years to help put downward pressure on costs for UK producers. The measure will remove tariffs as high as 18% on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers
- VAT registration and deregistration thresholds will not change from £85,000 for a further period of 2 years from 1 April 2024
Company Car Tax
- Rates for Company Car Tax will be set until April 2028
- Rates will continue to incentivise the take-up of electric vehicles
- Appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% in 2025-26; a further 1% in 2026-27, and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars
- Rates for all other vehicles bands will be increased by 1% for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28
- The 100% First Year Allowance for electric vehicle charging points will run to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes. This will ensure that the tax system continues to incentivise business investment in charging infrastructure
Energy Bill Relief Scheme
An HM Treasury-led review of the EBRS will determine support for non-domestic energy consumers, excluding public sector organisations, beyond 31 March 2023. The findings of the review will be published by 31 December 2022.
While the government recognises that some businesses may continue to require support beyond March 2023, the overall scale of support the government can offer will be significantly lower, and targeted at those most affected to ensure fiscal sustainability and value for money for the taxpayer.
More Budget reports
Personal tax and public spending announcements from the Autumn Budget
New Chancellor of the Exchequer Jeremy Hunt today made the official Autumn Statement 2022 on 17 November, outlining plans to stabilise and grow the economy....
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