Autumn Finance Bill published to cut tax and back business
The Autumn Finance Bill 2023 has been published to enshrine a raft of landmark tax changes into law.
Following last week’s Autumn Statement for Growth, the Autumn Finance Bill 2023 has been published today (Wednesday 29 November 2023) to enshrine a raft of landmark tax changes into law.
Measures in the Bill back British business by cutting and simplifying tax to help them invest for less, making full expensing permanent – an effective £11 billion a year corporate tax cut.
It also simplifies R&D and extends the Enterprise Investment Scheme and Venture Capital Trust schemes by an extra ten years each to 2035, ensuring younger companies can attract the finance they need today to become the unicorns of tomorrow.
The majority of tax changes in the Bill will take effect from April 2024.
Financial Secretary to the Treasury, Nigel Huddleston, said:
“This Bill marks our next step in making the UK into the best place in the world to do business - and that’s the way we grow our economy and drive up living standards for all.
“We have the lowest rate of corporation tax in the G7, and full expensing effectively cuts it further by £11 billion a year - the biggest British business tax cut in modern British history to help firms invest for less.”
Permanent full expensing effectively cuts corporation tax by £11 billion per year and ensures that the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, including the United States, Japan, South Korea and Germany. The Autumn Statement is expected to result in an extra £20 billion of investment per year by the end of the decade.
Permanent full expensing helps companies to continuously invest for less by allowing them to deduct 100% of the cost of a wide range of plant and machinery – such as lorries, drills and office chairs - from their profits before tax. For every pound a company invests in plant or machinery, their taxes are cut by up to 25p.
Since the introduction of the super deduction – the predecessor to full expensing introduced in 2021 – investment in the UK has grown the fastest in the G7.
As well as reforms to capital allowances, the Chancellor Jeremy Hunt announced other measures that are also featured in today’s Bill to cut and simplify tax to boost investment and get the economy growing. These include:
- Changes worth £280 million a year to simplify and improve R&D tax reliefs. The government will merge the current R&D Expenditure Credit and SME schemes.
- Legislating for more generous support for loss-making R&D intensive SMEs as announced in spring.
- Extending the sunset clause for the Enterprise Investment Scheme and the Venture Capital Trust scheme to 6 April 2035. -For the creative sector, reforming the film, TV and video games tax reliefs to refundable expenditure credits.
- Expanding the ‘cash basis’ – a simplified way for over four million smaller, growing traders to use a simpler method of calculating their profits and pay their income tax.
The Bill received its first reading in Parliament on Monday 27 November 2023. It will now follow the normal passage through Parliament.
- Read the Autumn Finance Bill 2023.
- The Bill also legislates for several tax changes which have been previously announced and consulted upon.
- In March 2021, the former Chancellor announced the super-deduction, the biggest two-year business tax cut in modern British history, under which companies saved up to 25p in each pound they invested. Then at Spring Budget 2023, the now Chancellor introduced temporary full expensing, a three-year capital allowances policy which also delivered up to a 25p saving for every £1 invested.
- To provide certainty, when announcing full expensing, the Chancellor was clear that his ambition was to make it permanent when fiscal conditions allowed. At the Autumn Statement, the Chancellor has delivered on this by confirming he will make full expensing permanent. The biggest business tax cut in modern British history over a five year period.
- The changes to National Insurance, which will take effect on 6 January 2024 for employees and 6 April for self-employed people, is being legislated through a separate Bill to the Autumn Finance Bill 2023.
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