In many respects, this was a traditional Autumn Statement, with the focus on spending and policy decisions as opposed to broad taxation measures.
At the start of his speech, the Chancellor announced that there were 110 specific measures aimed at building a stronger and more resilient economy by unlocking growth and productivity. There had been significant speculation in recent weeks of potentially large tax cuts. However, one of the key changes anticipated – fundamental changes to Inheritance Tax – did not come to pass. Indeed, so untouched are the Inheritance and Capital Gains Tax regimes that there was not a single reference to either tax in either the speech or supporting documents. Alcohol and tobacco duties aside, Indirect taxes were also virtually untouched.
Changes to the Corporation Tax regime, such as the extension of full expensing rules for qualifying plant and machinery, and the merger of the two existing R&D tax credit schemes into a single scheme are of significant importance to businesses with expenditure in these areas. However, both were of no surprise as they were stated intentions of the Chancellor in previous announcements. However, some technical changes may become evident in each case when draft legislation is released.
The “rabbit out of the hat” moment came in the form of the 2% cut to the main rate of Employees National Insurance, to take effect from January 2024, rather than the traditional 6 April date. This will require emergency legislation to take effect by that date. However, although a cut in absolute terms, it is likely that the benefit is outweighed by the effects of “fiscal drag” where rising incomes fall into higher tax brackets as a result of frozen personal allowances and thresholds. The more modest reduction of 1% in Class 4 National Insurance for the self-employed takes into account the abolition of Class 2 National Insurance across the board.
Overall, therefore, the absence of other significant changes to the tax system means that for most, if not all, businesses and individuals the tax landscape looks very much the same as it did when we woke up this morning. However, with one final fiscal event in the form of the Budget next Spring before an anticipated general election, this may be a deliberate ploy by the Chancellor to leave the best to last.
In our Autumn Statement 2023 guide, our tax specialists examine the most significant announcements in greater detail, exploring what they mean for taxpayers.