Capital allowances: full expensing
Full expensing, which was originally due to expire on 31 March 2026, is to be made permanent. This allows companies incurring qualifying expenditure on the provision of new plant and machinery to claim a 100% first-year allowance for main rate expenditure and a 50% allowance for special rate expenditure.
Expenditure on plant and machinery for leasing remains excluded, but the government will consult on a potential removal of this exclusion. The government will also consult on wider changes to simplify capital allowances legislation.
Research and development (R&D) tax reliefs
The R&D expenditure credit and the small or medium enterprise (SME) schemes will be merged for accounting periods beginning after 31 March 2024. The rate under the merged scheme will be 20% and the notional tax rate applied to loss-makers will be the corporation tax small profit rate of 19%.
The enhanced support for R&D-intensive SMEs will continue. The intensity threshold for the level of R&D expenditure required to qualify for enhanced support will be reduced from 40% to 30% from 1 April 2024. Loss-making companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition of R&D intensity.
For claims made after 31 March 2024, the use of nominations for R&D tax credit payments will be removed, meaning that payments must go directly to the claimant company.
The government intends to increase the generosity of the Audio-Visual Expenditure Credit for visual effects expenditure and will work with the industry on how best to design this with the intention of implementing changes from April 2025.
The small business multiplier will be frozen for another year and the 75% relief for retail, hospitality and leisure properties will be extended for 2024/25. The standard multiplier will be uprated by 6.7%.
The investment zones programme will be extended from five to ten years. New investment zones have been announced in Greater Manchester, the West Midlands and the East Midlands, with specific focuses. There will also be two investment zones in Wales: in the Cardiff and Newport area and the Wrexham and Flintshire region.
Freeport tax reliefs
The sunset date for the freeport tax reliefs will be extended to 30 September 2031 for freeports in England, conditional on agreement of delivery plans. For freeports in Scotland and Wales the reliefs will be extended from five to ten years, subject to agreement with the devolved administrations.
Making tax digital (MTD)
The £30,000 threshold for MTD for income tax self assessment will remain. This means people with gross income from self-employment and property below this threshold will not have to file tax returns using MTD. Foster carers and people unable to get a national insurance number will also be exempt.
The government will also simplify the requirements for all taxpayers providing quarterly updates and for taxpayers with more complex affairs, such as landlords with jointly-owned property. An end of period statement will no longer have to be provided.
The income tax cash basis will be expanded for self-employed individuals and partnerships from 6 April 2024. The cash basis will become the default method for small businesses and the current turnover, interest and loss relief restrictions will be removed.
Training costs for self-employed people
HMRC will rewrite guidance about the tax deductibility of training costs for sole traders and the self-employed to provide more clarity to business on what costs are deductible.
VAT: energy-saving materials
VAT relief on the installation of energy-saving materials will be extended to additional technologies, such as water-source heat pumps. Buildings used solely for a relevant charitable purpose will be brought within scope. The changes will take effect from February 2024.
Construction industry scheme (CIS)
Compliance with VAT obligations will be added to the CIS gross payment status test. HMRC will also gain extended powers to remove gross payment status immediately in cases of serious non-compliance involving VAT, income tax and corporation tax self assessment and PAYE. The majority of payments by landlords to tenants will be removed from the scope of the CIS. The changes will take effect from 6 April 2024.
Tax avoidance and fraud
It will become a criminal offence for promoters of tax avoidance to continue to promote schemes after receiving a Stop Notice requiring them to stop promoting schemes described in that notice.
HMRC will be able to bring disqualification action against directors of companies involved in promoting tax avoidance. The changes will take effect from the date of Royal Assent to Autumn Finance Bill 2023, together with the doubling of the maximum sentences for tax fraud to 14 years announced in the Spring Budget 2023.
There will be amendments to the multinational and domestic top-up taxes to reflect recent internationally agreed guidance and make clarifications following consultations. The Undertaxed Profits Rule will be added to the multinational top-up tax for accounting periods beginning on or after 31 December 2024.
A new planning service will be introduced to speed up planning decisions. Applicants will have to pay the full cost of the process, which will be refunded if the planning authority does not meet the stated timescale. Some planning constraints will be removed to accelerate the expansion of electric vehicle charging infrastructure.