Published on: 23 November 2023
Last week Rishi Sunak led a government reshuffle which included the appointment of a new Minister for Maritime, Lord Davies of Gower, and this week saw the Chancellor deliver his Autumn Statement. This coincided with the Office of Budget Responsibility (OBR) lowering its forecast for medium-term growth rate to 1.6 per cent from 1.8 per cent in March.
The OBR forecasts 0.6 percent GDP growth in 2023, 0.7 per cent in 2024, 1.4 per cent in 2025, and an average of 1.9 per cent between 2026 and 2028. It predicts inflation will not slow to the Bank of England’s target of two per cent until the second quarter of 2025, despite the fact CPI has fallen to 4.6 per cent, down from its peak of 11 per cent last October.
Autumn Statement announcements included:
Full expensing to be made permanent in the Autumn Finance Bill 2023, so that investments made by companies in qualifying plant and machinery, after 1 April 2026, will continue to qualify for a 100 per cent first-year allowance for main rate assets, and a 50 per cent first year allowance for special rate (including long life) assets.
Business rates: retail, hospitality, and leisure relief – The current 75 per cent tax relief for eligible Retail, Hospitality and Leisure businesses (including marinas) will be extended for a further year enabling those eligible businesses to receive support up to a cash cap of £110,000 per business
Business rates: multiplier – For 2024-25, the small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be uprated by September CPI to 54.6p
Freeports - £150m to support Freeports and Investment Zones across the UK to secure business investment opportunities. The fund will be available over five years. In addition, the window to claim Freeport tax reliefs for English Freeports, such as Solent and Plymouth Freeports will be extended from five to ten years, until September 2031.
Research and Development Tax Reliefs
Merger of the RDEC & SME schemes - The Research and Development Expenditure (RDEC) and SME schemes will be merged with the notional tax rate applied to loss-makers in the merged scheme will be lowered from 25 percent in the current RDEC scheme, to 19 per cent.
R&D intensive loss-making SMEs – The intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40 per cent to 30 per cent to bring around 5,000 more R&D intensive SMEs into scope of the relief.
Energy Security and Net Zero (including fiscal changes)
Electricity distribution - National Infrastructure Commission to undertake a study on making the electricity distribution network fit for Net Zero. In addition, the Government has announced a joint action plan with Ofgem to reduce the time it takes viable projects to connect to the electricity grid.
VAT relief on energy saving materials - The Government will expand the VAT relief available on the installation of energy-saving materials by extending the relief to additional technologies such as water-source heat pumps
Energy efficiency - The government is introducing a new, six-year Climate Change Agreement scheme. Participants that meet agreed energy efficiency or decarbonisation targets between 2025 and 2030 will be entitled to reduced rates of Climate Change Levy from 1 July 2027 to 31 March 2033
Climate Change Levy - The government will freeze main and reduced rates of Climate Change Levy in 2025-26 at the main rate of £0.00775/kWh for electricity and gas, £0.02175/kWh for liquid petroleum gas (LPG), and £0.06064/kWh for any other taxable commodity. Reduced rates will be frozen at 92 per cent for electricity, 77 per cent for LPG, and 89 percent for gas and any other taxable commodity
UK Emissions Trading Scheme (ETS) Reforms to the ETS as set out in July will reduce the number of ETS permits available for purchase by 45 percent between 2023 and 2027. Government will extend the scheme to cover emissions from domestic maritime and energy from waste in 2026 and 2028 respectively to help achieve its Net Zero ambitions.
Low carbon infrastructure - the Government will consult on amending the National Planning Policy Framework to ensure that the planning system prioritises the rollout of electric vehicle charging infrastructure
People and Skills
National Living Wage - From 1 April 2024, the National Living Wage (NLW) will increase by 9.8 percent to £11.44 an hour for eligible workers across the UK aged 21 and over. (see note below on implications below for employers)
Restart scheme – The government will expand its programme of employment support for the long-term unemployed for two years from 2024 across England and Wales. From late e 2024, Universal Credit claimants who have completed Restart but remain unemployed after 18 months may be required to attend mandatory work placements
Business visitor visa reform – The government will expand the business visitor rules to allow business people to engage in a wider range of permitted activities and paid engagements, to take effect from January 2024. The government will also explore further reforms to the business visitor rules during 2024
Youth Mobility Schemes – The government is signing and expanding new and existing Youth Mobility Schemes to improve UK and overseas nationals’ opportunities to live, work, and travel in each other’s countries.
Employer National Insurance Contributions - The government is extending the NICs relief for employers of eligible veterans for one year. The relief means businesses pay no employer NICs on annual earnings up to £50,270 for the first year of a qualifying veteran’s employment in a civilian role.
Note re NICs - whilst a key headline has been the cut to class 1 employee National Insurance Contributions from 12 per cent to 10 percent in January to give 27 million working people an increase in their take home pay, there was no equivalent NIC reduction for employers. Due to the decision to increase the National Living Wage, employers who have staff paid at the NLW, from next April it will not only cost an additional £1.02 per hour per employee, but there is the additional whammy of 13.8 per cent employer’s NIC on top of that. Some employers are likely to be significantly affected by these changes.
UK Export Finance SME Support – The Government will offer additional support to SMEs to access global markets through UK Export Finance including reviewing the products available for SMEs and enhancing the SME-focused support that is offered
Tariff suspensions – The government is maintaining tariff-free imports on over 2,000 goods to provide continuity and avoid unnecessary costs for UK businesses. This measure will extend, for five years, tariff suspensions on a range of goods.
Key changes from the recent government reshuffle include
Steve Barclay MP replaces Therese Coffey as Secretary of State for Environment, Food and Rural Affairs. (Note Rebecca Pow remains Junior Minister for Environmental Quality and Resilience and lead for the Environment Agency)
Lord Davies of Gower replaces Baroness Vere as Junior Minister in the Department for Transport. His responsibilities include maritime and maritime accessibility. Byron Davies was MP for Gower from 2015 to 2017, having previously been a Welsh Assembly Member. He is a former detective with the Metropolitan Police and also spent several years living in eastern Europe helping to prepare EU countries of accession.
Anthony Browne MP has been appointed Minister for Decarbonisation and Technology in the Department for Transport
For further information on the above government appointments please email [email protected] or for more details re the Autumn Statement please see links below: