Following last week's Autumn Growth Statement, the Autumn Finance Bill 2023 was published today (Wednesday 29 November 2023) to enshrine a series of historic tax changes into law.
The measures contained in the bill support British businesses by cutting and simplifying taxes to help them invest for less, making the overall spend permanent โ โโan effective corporate tax cut of ยฃ11 billion a year.
It also simplifies R&D and extends the Business Investment Plan and Venture Capital Trust schemes for a further ten years each, until 2035, ensuring that younger companies can attract the funding they need today to become the unicorns of the future. tomorrow.
Most of the tax changes in the bill will take effect starting in April 2024.
Treasury Finance Secretary Nigel Huddleston said:
โThis bill marks our next step in making the UK the best place in the world to do business, and that is the way we grow our economy and raise living standards for everyone.
"We have the lowest corporation tax rate in the G7, and the total burden effectively reduces it further by ยฃ11 billion a year - the biggest cut to British corporation tax in modern British history to help businesses invest for less".
The permanent full charge effectively reduces corporation tax by ยฃ11 billion per year and ensures that the UK will continue to have the lowest corporation tax rate in the G7 and the most generous capital allowances in the group of major advanced economies. the OECD, including the United States. United States, Japan, South Korea and Germany. The Autumn Statement is expected to generate additional investment of ยฃ20 billion per year by the end of the decade.
Total permanent spend helps businesses continually invest for less, allowing them to deduct 100% of the cost of a wide range of plant and machinery (such as trucks, drilling machines and office chairs) from their pre-tax profits. For every pound a company invests in plant or machinery, its taxes are reduced by up to 25p.
Since the introduction of the super deduction (the predecessor to the full expense exemption introduced in 2021), investment in the UK has been the fastest growing in the G7.
In addition to reforms to capital allowances, Chancellor Jeremy Hunt announced other measures also featured in today's Bill to reduce and simplify taxes to boost investment and grow the economy. These include:
- Changes worth ยฃ280 million a year to simplify and improve R&D tax relief. The government will merge current credit programs for research and development expenses and for SMEs.
- Legislate for more generous support for R&D-intensive, loss-making SMEs, as announced in spring.
- Extend the sunset clause of the Business Investment Plan and the Venture Capital Trust Plan until April 6, 2035. -For the creative sector, reform tax credits for film, television and video games to refundable expense credits.
- Broaden the 'cash base' - a simplified way for more than four million smaller and growing traders to use a simpler method of calculating their profits and paying their income taxes.
The bill received its first reading in Parliament on Monday, November 27, 2023. It will now follow the normal process through Parliament.
More information
- Read the Fall 2023 Finance Bill.
- The bill also legislates for several tax changes that have been previously announced and consulted on.
- In March 2021, the former chancellor announced the super deduction, the largest two-year business tax cut in modern British history, under which businesses saved up to 25p for every pound they invested. Then, in the 2023 Spring Budget, the now Chancellor introduced temporary full spending, a three-year capital allocations policy that also delivered savings of up to 25p for every ยฃ1 invested.
- To provide certainty, in announcing the total spending, the Chancellor made it clear that his ambition was to make it permanent when fiscal conditions permitted. In the Autumn Statement, the Chancellor delivered on this by confirming that he will make the total spending permanent. The biggest business tax cut in modern British history over a five-year period.
- The changes to National Insurance, which come into force on January 6, 2024 for employees and April 6 for the self-employed, are being legislated through a separate bill to the Autumn 2023 Finance Bill .
