Autumn Statement 2023

The Chancellor presented his Autumn Statement 2023 in just under an hour promising a raft of measures to enhance growth.

Speculation has been rife on possible measures over the last few weeks, inheritance tax was going, staying but at a lower level, stamp duty land tax to be cut to stimulate the housing market, inflation-linked benefits to link to a different month’s rate than usual and full expensing relief for plant and machinery investment would be made permanent. One was correct.  The speculation on National Insurance Contribitions (NIC) had barely begun so this was the real rabbit.   

We have summarised our thoughts on the key changes for you below. 

Autumn Statement 2023 webinar

Our Chief Economist George Lagarias and tax experts Chris Ridley, Sean Cockburn, Pujah Joshi and Ian Goodwin discuss the Chancellor's Autumn Statement 2023 announcements and what this could mean for you or your business.

Corporate taxes

Capital allowances 

What was announced?

“Full expensing to be made permanent”

The current full expensing relief was introduced in the 2023 budget and covers expenditures from April 2023 to March 2026. As such, it was a temporary allowance lasting only 3 years, to meet the chancellor’s fiscal rules of the time, but also stimulate investment following the end of super deduction.

During this period a 100% or 50% deduction for relevant capital costs (without monetary limit) could be set off against taxable profits – providing a very generous relief and stimulating continued business investment.

What does this mean?

With the end of the temporary relief in sight, companies with large-scale capital projects faced an unknown tax position and smaller-scale projects would be accelerated prior to the end date, with presumably a potential fall off of investment post April 2026. Larger businesses will need to assess the impact of claiming these allowances on their pillar two compliance obligations.

The changes announced today, making full expensing “permanent”, provide companies with the certainty of tax allowances for proposed capital expenditure beyond April 2026, which will allow for better planning of large-scale capital projects and less of a feast to famine approach for small-scale capital expenditure.

These will be welcome changes for relevant companies but in the world of politics, does permanent really mean forever…? At present there seems to be a consensus across the political spectrum around stimulating investment-led growth so it seems unlikely that they would go back on it.

Also, as part of the announcements, the government will launch a technical consultation on wider changes to the capital allowances legislation, as the introduction of permanent full expensing provides an opportunity to consider simplification of the capital allowances tax system. Without committing to any further changes, there will also be a working group set up to explore whether first year allowances can be extended to leased assets in some circumstances.

Neil Strong

Innovation and Research and Development (R&D)

What was announced?

Following a consultation during the summer of 2023, the Chancellor has confirmed that the proposed new merged R&D tax incentive scheme based on RDEC, replacing the existing SME and RDEC schemes, will be launched in April 2024.

The Chancellor also announced a decrease in the rate of Corporation Tax from 25% to 19% for loss-making companies under the merged scheme and a reduction in the R&D intensity threshold from 40% to 30% under the R&D Intensives scheme, potentially introducing around £280m of additional funding to innovative businesses.

Innovative businesses in the AI space may also benefit from the commitment of a further £500m to compute for AI, bringing the investment committed to date to £1.5bn.

What does this mean?

Whilst HMRC have issued some initial guidance on the new merged RDEC tax incentive scheme there is still some detail lacking as to how the scheme will operate in practice. However, we are clear that the current proposal is to implement the new scheme at the current RDEC rate of 20% with the notional rate applied to loss-makers under the scheme being reduced to 19% rather than the current 25%.

A notable change from the existing scheme is that the company that makes the decision to undertake the R&D, should be able to claim the RDEC relief, the main impact being to enable larger companies, who would have been unable to claim under the existing RDEC scheme, to claim relief for sub-contracted R&D and for sub-contractors having clarity as to what they can and cannot claim.

The subsidised expenditure rules, which currently impact companies in the SME scheme to limit the ability of the company to claim, will no longer apply under the merged scheme. This will mean, for example, the receipt of a grant for a project, or where the cost of the project is otherwise met by a third party, it will not prevent a company from claiming relief for the gross expenditure on the project under the merged scheme.

It is pleasing to see that following HMRC’s rejection of the FTT decision in Quinn (London) Limited, representations made by those involved in making or assisting in making R&D claims on the inequity of HMRC’s approach has resulted in the incorporation in the merged regime of the removal of any restriction for subsidised expenditure.

The proposed restrictions on claiming for certain overseas costs, that have been well-trailed, remain in the proposed merged scheme effective 1 April 2024.

For the avoidance of doubt, after 1 April, when the merged scheme is in place, the additional tax relief for R&D Intensive SMEs will remain in place as this is not part of either the existing SME or RDEC schemes.

Gary Collins

Share incentives

What was announced?

The measure to extend the deadline for EMI grant notifications was originally announced in the Spring Budget 2023. This measure was confirmed in the Autumn Statement to apply for EMI share options granted on or after 6 April 2024.  The measure extends the deadline from the current 92 days from the date of the initial grant to 6 July following the end of the tax year in which the option was granted.


What does this mean?

This is simply an administrative change, but a welcome one. It brings the notification procedure in line with the annual EMI reporting process, rather than having an additional deadline to meet during the year. Currently, the grant of EMI options is notified to HMRC within 92 days, through an online portal, on a separate template to the annual return, and then nothing is included about the grants in the annual return. This change means the in-year deadline is less likely to be missed, but also helps for better data recording, as currently there is no way of viewing grants submitted to HMRC unless screenshots were taken, but now, the data will be saved as part of the online annual return template.

- Amy Reynolds

Enterprise Management Incentive & Venture Capital Trust schemes

What was announced?

The “sunset clauses” on EIS and VCT schemes are to be extended from 6 April 2025 to 6 April 2035 for qualifying investments made on or after 6 April 2025. 

What does this mean?

A review of the EIS and VCT schemes was undertaken in 2022, the findings were published at the same time as the Autumn Statement, focusing primarily on their use and whether they are ‘fit for purpose’. However, one point that came out of this review, was that currently there is a sunset clause to review and reform the EIS and VCT schemes by 6 April 2025. Based on the findings, HMRC are happy that the schemes work as intended - encouraging investment, and has been viewed favourably by investors, with no better alternatives identified.

As a result, HMRC clearly has no wish to reform EIS or VCT at this current time and have therefore extended the sunset clause to 6 April 2035. This will mean that individuals can continue to benefit from the various reliefs affiliated with EIS or VCTs.

Companies in turn have the opportunity to continue attracting external investors via such schemes as a means of raising investment. to invest will continue to be able to do so with no change in the short to mid-term – a welcome confirmation for both parties.

- Amy Reynolds

International tax

What was announced?

As expected, a number of measures were announced in respect of Pillar 2, the 15% global minimum tax which covers multi-national and domestic top-up taxes. These amendments are the result of taxpayer consultations and are designed to bring the UK rules into line with Global Anti-Base Erosion rules, commentary and guidance agreed by the UK and other OECD countries. These will apply from 2024 (specifically accounting periods starting on or after 31st December 2023), in line with many countries including most of the EU.

The Autumn Statement also announced the expected introduction of the Undertaxed Profits Rule, the backstop to Pillar 2 which will allow HMRC to charge UK companies a top-up tax on the profits of any group members in low-taxed countries, even where the UK company is not the parent. This will be particularly relevant to US-headquartered groups, since the USA has not adopted Pillar 2. It will effectively apply from 2025 (specifically accounting periods starting on or after 31st December 2024),  a year after the main Pillar 2 rules.

What does this mean?

The announcements provide further clarification on a complex piece of legislation that requires large enterprises (those with annual global turnover in excess of €750m) to apply a minimum tax rate of 15% in each of their operating jurisdictions.

The OECD administrative guidance was released in July 2023, so the impact of these changes will not be a surprise to those already in the process of analysing how the requirements will affect them.

These reforms will not change the broad principles of the system, but there are a lot of important details, including dealing with US-headquartered groups subject to GILTI, as well as clarifications for particular sectors and business structures.

- Claire Cowen

Private Client

NIC Class 2 and 4 

The abolition of Class 2 National Insurance Contributions will help simplify tax administration and benefit the average self-employed person by £192 a year, without affecting their entitlement to the State Pension.  The 1% reduction in the Class 4 rate paid on profits between £12,570 and £50,270 will provide a further benefit of up to £377 per year.

These measures will decrease the tax differential between self-employment and operating through a corporate vehicle, reducing the incentive for tax motivated incorporation of a business. 

As National Insurance is a reserved power, the changes will apply throughout the UK so Scottish taxpayers will also be able to benefit from these measures.

- Sean Cockburn

Pensions for Life

On the surface, the concept of a "pension for life" seems attractive. Especially for those who have spent time, and in some cases, significant fees consolidating a career's worth of pension funds.

There is also the potential that these super-sized funds could provide economies of scale for savers either in the form of lower pension costs, or wider investment opportunities. And they could boost financial literacy and engagement. We believe individuals will be more focused on actively managing one large fund than a larger number of smaller funds.

Beneath the surface, however, all is not necessarily positive. Auto Enrolment has broadly succeeded in creating a range of low-cost employer pension scheme options, often with appropriate and understandable investment options for the everyday saver.

The interaction of auto-enrolment with the new pensions for life has the potential to increase costs and investment complexity for investors, not to mention the huge undertaking it would involve for employers. This will need very careful consideration for both businesses and individuals.

- Nicholas Nesbitt 

Pension taxation

The devil is always in the detail and the Chancellor’s full Autumn Statement provides a nod towards clarity over how pensions will be taxed from April 2024.

The Lifetime Allowance removal has taken away the tax trap which forced high and middle-income earners to decide between cutting their professional lives short or facing a higher tax bill. But hand in hand with this has come new ‘death tax’ proposals which up until now, have been far from clear. Set to be clarified in the Finance Bill, the ‘Lump Sum Allowance’ and ‘Lump Sum and Death Benefit Allowance’ will hit how much people can pass to loved ones if they die before age 75.

Today, those who previously inherited funds from loved ones who died pre-75 received welcomed news that they could continue to access these funds tax-free. Additionally, proposed changes in the tax treatment of beneficiary pension funds will no longer take place.

This clarity should come soon and equip pension savers with the information they need to make informed decisions. You can read more about these changes here.

Sean Cockburn & Nicholas Nesbitt & Robert Barwise-Carr

Inheritance Tax (IHT) 

Despite much speculation in the lead-up to the Autumn Statement, the Chancellor did not make changes to Inheritance Tax (IHT).

With the IHT threshold, rates, reliefs and allowances unchanged where asset values and general wealth have increased, many more estates will still be swept into paying IHT, some unexpectedly. Individuals should check if their estate will be liable and if so, put in place plans to make use of allowances, the seven-year rule, or trusts to efficiently pass down wealth. 

Sean Cockburn

How the market has reacted

As detailed in our previous article, Jeremy Hunt had limited room for manoeuvre in today’s Autumn Statement. High levels of government indebtedness, a historically high tax burden on the UK population and the need to keep Conservative voters on side left the Chancellor walking a thin line.

Today materialised as we expected. The Chancellor made a number of small-scale announcements, aimed at getting more people into work, helping with long-term illnesses, upskilling the workforce, and improving productivity. For businesses, the biggest announcement was that full expensing of capital spending would be made permanent.

For individuals, the headline announcement was a reduction in National Insurance (NIC) by 2% from 12% to 10%, effective from 6 January 2024.

The effect on certain businesses will be significant, particularly for investment-intensive sectors. Looking at listed equities, share prices of certain sectors have quickly adjusted upwards as this information has been absorbed. BT, a bellwether capital-intensive business in the UK, has risen by more than 5% on this news.

For the UK economy more broadly, and UK asset prices by extension, there should be some cheer that the consumer has been supported through National Insurance cuts and pension uplifts however the scale of the support may not have been enough to “move the dial”.

The UK consumer has been under significant pressure as inflation has risen sharply over the last 2 years, and this is reflected in the very poor performance of more domestically focused UK mid-cap companies compared to their large-cap peers which today’s announcement alone will not be enough to reverse.

For investors deciding whether now is the time to increase their exposure to domestic UK businesses via listed mid and small-cap companies they ought to be cautious of the lack of international investor flows into the UK with a compelling reason to invest in UK business still lacking.

The most significant details for investors came in the form of the economic updates; the changes in the OBR expectations, the forecast for the UK economy to experience anaemic economic growth. The OBR upgraded 2023 growth and downgraded growth expectations for future years. As already mentioned, there is no catalyst for investors to head into UK risk assets but government bonds could see inflows. 

The improved growth forecast for 2023 and the higher tax revenues ought to reduce the need for HM Treasury to tap the bond market for funding, reducing bond issuance and supporting government bond prices. The low growth prospects also recommend bond investment in the UK as the line between a stagnant economy and one in recession is fine, so if risk-off sentiment were to grip UK assets then this would also see more money flowing into bonds. The UK’s falling inflation prospects further support this thinking.

In summary, nothing announced today will push investors into UK equities but the prospects for UK fixed-income investments seem solid, as long as inflation remains under control.

- James Hunter-Jones

Unincorporated businesses

The Chancellor announced the outcome of the Government’s review into Making Tax Digital (MTD) - its upcoming online system for unincorporated businesses and a key part of the future tax administration system. Those with relevant annual gross business and property income over £50,000 will be required to use MTD from April 2026, followed by those with income over £30,000 from April 2027. 

The Government has made some updates to accommodate those who use more than one agent, have joint properties or do not have National Insurance numbers (for instance non-residents) but we expect further revisions before the system is operational.

Mr Hunt also announced an extension to the cash basis method of calculating taxable profits for self-employed individuals and trading partnerships.  This is currently only available for businesses that have a turnover of £150,000 or less a year but, from 6 April 2024, the turnover criteria will be removed and the cash basis will become available for unincorporated businesses regardless of size. Currently, businesses that wish to use the cash basis must elect for it. The new measure proposes the cash basis as the default basis, with an election required to use the accruals basis. The method of election is through the self assessment tax return. Additionally, some restrictions on the use of cash basis losses have been removed. 

In addition, the restrictions that apply to the deduction of interest costs will also be removed.  Currently, interest costs are only allowable as an expense under the cash basis up to a value of £500 but this restriction will be removed from April 2024. 

The changes to the cash basis provide greater flexibility for business. Those used to filing tax returns on an accrual basis may need to more clearly set out whether they are continuing to apply that method going forward.   

Sean Cockburn

Employment taxes

National Minimum Wage (NMW)

What was announced?

From April 2024, the National Living Wage (NLW) rate (the highest rate of National Minimum Wage) is set to increase from £10.42 to £11.44 per hour, an increase of 9.78% as recommended by the Low Pay Commission. This is the largest ever increase to the minimum wage in cash terms worth over £1,800 (before any other interactions or adjustments) for a full-time worker and sees the government consider that it has fulfilled its pledge to end low pay.

Eligibility for the NLW will also be extended to 21-year-olds and over, that’s a 12.4% increase and worth almost £2,300 for a full-time worker again before any other interactions or adjustments).

The National Minimum Wage rates for younger workers will also increase; 18–20-year-olds will receive a 14.8% increase from £7.49 to £8.60 and those aged 16-17, and apprentices, will see an increase from £5.28 to £6.40 – that’s a 21.2% increase (see table below).

NMW rate from 1 April 2024

Increase in pence


Percentage increase

National Living Wage (21 and over)

£   11.44

£     1.02


18-20 Year Old Rate

£     8.60

£     1.11


16-17 Year Old Rate

£     6.40

£     1.12


Apprentice Rate

£     6.40

£     1.12


Accommodation Offset

£     9.99

£     0.89


What does this mean for employers?

However, whilst this is a welcome boost for workers, employers will be faced with some major challenges from increased employment costs, managing pay increases and maintaining pay differentials, increased pension contributions (given higher pensionable pay at play) to more scrutiny and controls needed to maintain minimum wage compliance remains in line with the complex rules and regulations, to improving and implementing reward strategies to attract new talent and retain existing employees.

- Ian Goodwin

National Insurance Contributions (NIC)

For employees, the big announcement was that Class 1 National Insurance Contributions (NIC) will reduce from 12% to 10% from January 2024.

What does this mean for employees?

It means employees will start to see an increase in their net pay from 6 January 2024 as they will be paying less National Insurance.

  • An employee earning over the Upper Earnings Limit of £50,270 per year will save approximately £750 per year; and
  • An employee earning close to the new National Minimum Wage rate of £11.44 per hour, say at £21,000 annually will see a net pay increase of approximately £168 per year related to this announcement.

Thresholds were frozen meaning NIC becomes payable at 10% from £12,570 and, more welcome, for higher earnings, the 2% NIC rate continues to kick in at £50,270.

What does this mean for employers?

There was no adjustment or reduction in Employer Class 1 NIC. Additionally, we are not aware of any change to the threshold – without any announcement, this is likely to mean that the 13.8% NIC rate will continue to be payable when an employee earns more than £9,100 per year (pro-rated for the relevant pay periods).

The position for employers remains unchanged. However, with pay rises likely given NMW increases from January 2024, businesses are likely to be paying more out in employer NIC especially where thresholds are not increased.

What other announcements were there?

In relation to Employment Taxes, there were two other “under the radar” announcements contained within the Autumn Statement documents:

  1. IR35 & Off Payroll Working - The government will legislate in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes already paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules.
  2. Construction Industry Scheme (CIS) - The government will introduce reforms in the Autumn Finance Bill 2023 to CIS, including adding VAT as part of the Gross Payment Status (GPS) compliance test. This will give HMRC more power to remove GPS immediately in cases of fraud. Alongside this, the government is also announcing simplifications to other aspects of the scheme, which will be subject to technical consultation.

A key overall takeaway was that the government are looking to lower the tax bill prudently by reducing NIC for employees and improving the pay of workers through major NMW increases. However, they are going to be enhancing and increasing scrutiny on employers to take tax compliance seriously.

There are added cost pressures to employers given these announcements and it will be important to further assess reward strategy, particularly when looking to differentiate pay gradings that might be being eroded given the NMW announcements.

Ian Goodwin

VAT and Indirect taxes

Reusable period underwear

What was announced?

As widely anticipated, VAT will no longer be charged on reusable period underwear (period pants) as the VAT treatment of the products will be brought into line with other women’s sanitary products.

What does this mean?

This means all such products will benefit from the zero rate of VAT and consumers may see a price reduction.

Linda Adelson &  Juliet Bailey

UK VAT and excise law

What was announced?

A key announcement on VAT law concerns the UK’s exit from the EU (Brexit) and how UK VAT and excise law should be interpreted in view of changes made by the Retained EU Law (Revocation and Reform) Act 2023 (REUL Act).

What does this mean?

It has been confirmed that UK VAT and excise law (whether in a UK Act of Parliament or domestic subordinate legislation) will continue to be interpreted in the light of retained EU law, except to the extent that this would have the effect of quashing or disapplying the UK rules. Despite the claim of stability and certainty in the policy announcements, it is our view that beneath this headline lies a lot of complexity, and the way this will evolve in practice does not seem entirely clear. For instance, the extent to which many EU rules that UK taxpayers have been accustomed to relying on, are not always explicitly included in UK law and their continued application is uncertain.

A consultation will be launched in 2024 regarding the Uber case which concerns contractual obligations of principals and agents.  Additionally despite not making any changes to the retail VAT export scheme and the associated airside scheme (tax-free shopping), the government will continue to accept representations on this area.

Linda Adelson &  Juliet Bailey

Other VAT points

What was announced?

More generally the government has announced that VAT relief for energy-saving materials will be extended with the intention that this will allow the VAT relief to keep pace with technological changes, such as the introduction of new products. The announcement specifically mentioned water source heat pumps. UK VAT law has often been criticised for failing to keep up with changes in technology, for example, the VAT rate on paper books compared to e-books was litigated, so this is a positive move if the relief can support a more dynamic approach to VAT.

A consultation will be launched in 2024 regarding the Uber case which concerns contractual obligations of principals and agents.  Additionally despite not making any changes to the retail VAT export scheme and the associated airside scheme (tax-free shopping), the government will continue to accept representations on this area.

- Linda Adelson & Juliet Bailey

Plastic packaging tax

What was announced?

The rate of Plastic Packaging Tax will increase in line with inflation (CPI) with effect from 1 April 2024.

What does this mean?

This announcement results in an increase to the rate of Plastic Packaging Tax from £200 per metric tonne to £210.82 per metric tonne.

Linda Adelson & Juliet Bailey


Healthcare and Life Sciences

What was announced?

Life sciences certainly had a major role in today’s Autumn statement speech with the Chancellor reinforcing the message that the sector is a strength of the UK economy and is critical to the country’s health, wealth, and resilience.

The major tax changes around merging the two Research and Development (R&D) regimes and allowing full capital allowance expensing for plant or machinery purchases will have a significant impact to this sector. The new investment zone focussed on health technology and life sciences will also be very welcome in West Yorkshire. The desire of the UK government to back British world leading industries means that many of the initiatives to foster innovation and growth will directly impact this sector.

The Government is also accepting all the recommendations of the independent review of university spin-outs and will provide £20m to help prospective founders in the UK’s universities demonstrate the commercial potential of their research.

Tucked away in the fine detail was the announcement that the Government has reached an ‘in-principle’ agreement with the Pharmaceutical industry on the 2024 voluntary scheme on Branded Medicines, Pricing, Access, and Growth. The scheme is intended to deliver £14 billion of savings to the NHS over the next five years.

What does this mean?

Fledgling life sciences companies will welcome the focus on university spin outs, and other changes announced such as the access to funding from UK pension schemes and extension of EIS and VCT to 2035. Together with the West Yorkshire investment zone, these measures will hopefully contribute to the growth of the sector which will also benefit from SDLT, enhanced capital allowances and business rate benefits.

Big Pharma may need to apply ever newer technology to its manufacturing processes to benefit from the investment incentives. The additional £520m of funding to support transformational manufacturing investment in life sciences may be helpful in this regard. This investment also builds on the £121m announced in Spring to boost the UK’s commercial clinical trial offering. With respect to larger businesses, we await further detail on how the merged R&D tax relief regime will interact with pillar two legislation.

- Ludovic Black & Chris Ridley

Public and social

What was announced?

HS2 budget now expected to be reallocated: £36 billion to Network North to expand Northern Powerhouse Rail; an extra £8.3 billion to roads resurfacing across England; a mass transit system in West Yorkshire; and £8.55 billion of additional funding for the second round of City Region Sustainable Transport Settlements (CRSTS2).

Guidance for the Local Government Pension Scheme (LGPS) in England and Wales will be revised to implement a 10% allocation ambition for investments in private equity, which is estimated to unlock around £30 billion. Plus, a March 2025 deadline for the accelerated consolidation of LGPS assets into pools and setting a direction towards fewer pools exceeding £50 billion of assets under management.

The Affordable Homes Guarantee Scheme will have a £3 billion extension aimed at delivering 20,000 new homes, as well as improving the quality and efficiency of other houses.

The Public Works Loan Board policy margin, announced at Spring Budget 2023, will be extended to 2025 to support local authority investment in social housing. An aim to deliver an additional 2,400 homes by allocating £450 million to a third round of the Local Authority Housing Fund will provide additional funding for new temporary accommodation and homes for Afghan refugees.

The Autumn Statement formally announced four new devolution deals (for Cornwall, Lancashire, Lincolnshire and East Yorkshire / Hull) as well as progress in deepening devolution for existing mayoral combined authorities, although these were largely expected.

What does this mean?

The Autumn Statement shows a continued commitment to regional devolution and leveraging public investment to support capital and infrastructure. The focus on rail, roads and housing creates an opportunity to make tangible investment in supporting economic development and social value – however, these are long-term projects, where benefits won’t be seen overnight.  

The increased funding for local authority housing continues the move away from the previous long-standing policy of shifting social housing to independent housing associations. The most direct investment into local government was two days ago when the Department for Levelling Up, Housing and Communities announced that 55 local authorities would be getting their hands on a share of £1 billion funding to support the government’s levelling up agenda.

The OBR’s comments are not lost on us, who report that “because departmental spending is left largely unchanged, this delivers a net fiscal windfall of £27 billion. The Chancellor spends virtually all of this on a 2p cut in NICs, permanent tax relief for business investment, and further welfare reforms, leaving debt falling by a narrow margin in five years”.

Whilst there was no direct reference to funding day-to-day costs through new grant initiatives to tackle some of the key financial challenges in, for example, out of area placement costs in children’s social care, we hope this does not instil paralysis in local authorities, delaying decision making and causing short-term thinking, and instead enables them to focus on some of the core issues within their control.

- Mark Surridge & Suresh Patel


What was announced?

The core announcements impacting the Energy Sector are mainly around corporate taxation.

  1. The introduction of the full expensing for capital allowance purposes, extending the previously announced regime from 2026 to being a permanent regime.
  2. The proposed introduction of an investment relief for the Electricity Generation Levy for receipts generated from new or expanded generation stations relief to be treated as exempt; and
  3. Various measures for Ring Fenced Oil, such as additional reliefs for expenditure on decommissioning where this transitions oil and gas assets into carbon capture usage and storage facilities.  

What does this mean?

For most primary energy sector transactions, the introduction of a permanent “full expensing” regime is of limited benefit. For the majority of energy sector projects, the quantum of the expenditure is such that capital allowances in the initial trading periods often result in the operations being loss making. In future periods losses and capital allowances can combine to mitigate future profits. Now, large losses will be created in the initial operating periods, the utilisation of which may be limited under the group loss allocation rules. Therefore, for groups and portfolio arrangements, these changes may result in taxable profits arising sooner than anticipated.

The changes on the EGL proposed are broadly good news, as it is proposed that revenues from new generating stations and expansion of existing generating stations, where the investment decision is made on or after 22 November, would be exempt from the EGL. The changes are not prescriptive and it is unclear how significant an investment would need to be to meet the criteria. The exemption also doesn’t act to exclude assets operating or investments which are currently being made. In the context of falling electricity prices over the second half of FY23, the EGL is likely to raise less than anticipated. However, the exemption is limited in its application but a welcome addition to potentially ring-fence the impact of EGL to generating assets already in existence and could be interpreted as a direct response to the recent off-shore wind auction in September this year where the Government received no bids.

Outside of tax, the largest changes and good news stories are in relation to the proposed changes to the timing to access grid connections. The changes are potentially bad news for developers, on the basis that grid-connections and planning are easier to obtain, the scarcity value and premium paid for rights being sold by developers may therefore reduced. However, it would be good news for the sector as a whole as it should reduce the sunk cost of bringing new projects to operation.

- Greig Simms

Financial services 

Capital expenditure and innovation

What was announced?

  • The Government will introduce legislation to combine the two current Research & Development (R&D) tax relief schemes, the Research and Development Expenditure Credit (“RDEC”) scheme and SME R&D relief. The new combined scheme will take effect for accounting periods beginning on or after 1 April 2024. Qualifying R&D costs, including contracted out R&D, will attract a 20% tax credit, as for the existing RDEC scheme.
  • The “full expensing” regime (a 100% first year allowance for plant or machinery expenditure) was due to expire in April 2026. The Government will legislate in the Autumn Finance Bill to remove the 2026 end date and so make full expensing permanent.
  • Commencing in January 2024, HM Treasury and HMRC will undertake a technical consultation with industry stakeholders on whether changes should be made to plant or machinery allowances under the Capital Allowances Act 2001, with a view to publishing draft legislation in Summer 2024.

What does this mean for the sector?

  • Many financial services companies incur expenditure qualifying for R&D reliefs, typically where they develop software for their innovative purposes. As for the existing RDEC scheme, the 20% tax credit under the new combined R&D scheme will form part of the company’s pre-tax profit. This increases above the line profit and means that, at a 25% rate of corporation tax, the net benefit is 15% of the qualifying expenditure.
  • Improvements to the existing RDEC regime are the inclusion of contracted out R&D expenditure and the incorporation of the more generous PAYE and National Insurance Contributions cap from the old SME R&D scheme. On the other hand, the new combined scheme now has restrictions on relief for overseas R&D expenditure. This will mean that software developers and similar R&D contractors will usually need to be onshore in the UK.
  • Making the full expensing regime permanent is good news for financial services companies investing in plant or machinery assets, including software. Companies can elect for software expenditure to be treated as plant or machinery, so expanding their range of qualifying assets.
  • Making full expensing permanent will remove any rush to complete expenditure by April 2026.
  • No broadening of the full expensing regime to encompass expenditure on plant or machinery for leasing was announced in the Autumn Statement. This is something the leasing industry has been seeking. The question may remain open in the forthcoming consultation.

Tonnage tax

What was announced?

  • As trailed in the Spring Budget, draft legislation has now been published to increase, with effect from 1 April 2024, the capital allowance limits for leasing into tonnage tax. The cost limit qualifying for 18% writing down allowances will increase from £40 million to £100 million. The cost limit qualifying for 6% special rate allowances will also increase from the next £40 million to the next £100 million, bringing the overall limit to £200 million.
  • The legislation will also extend the tonnage tax regime to include managers of ships. Currently, the tonnage tax regime applies only to operators of ships.

What does this mean for the sector?

This is the first increase in the capital allowance cost limits for leasing into tonnage tax since 2000. The changes will be attractive to ship lessors, including banks involved in marine finance. They mean that ship lessors can significantly increase their qualifying expenditure on ships leased into the tonnage tax regime. Companies which elect into the tonnage tax regime can calculate their profits based on the net tonnage of the vessel operated, rather than their tax-adjusted commercial profits.  Opening the tonnage tax regime to ship managers is aimed at making the tonnage tax regime more internationally competitive and encouraging the growth of the UK’s ship management market.

UK captive insurance regime

What was announced?

  • The Government will consult on the design of a new framework for encouraging the establishment and growth of captive insurance companies in the UK. The consultation will launch in Spring 2024.

What does this mean for the sector?

  • Following the introduction of the Qualifying Asset Holding Company (“QAHC”) regime, this continues the recent trend of the Government seeking to introduce initiatives to encourage investment into the UK which would ordinarily be directed towards other jurisdictions (e.g. Bermuda), through the introduction of a competitive tax regime focused around captive insurers. We await more details as and when the consultation is released in 2024.


What was announced?

  • The Government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension ‘Pot for Life’, and on a potentially expanded role for collective defined contribution (“CDC”) schemes in future.
  • The Government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000.
  • The removal of the Lifetime Allowance (“LTA”), which is the maximum amount an individual can contribute to their pension pot without triggering tax charges, was announced in the Spring Budget. This abolition remains on track as the Government has announced that they will legislate in the Autumn Finance Bill 2023 to remove the LTA from 6 April 2024.

What does this mean for the sector?

  • In addition to the impacts the ‘Pot for Life’ will have on individual savers, and despite not being a ‘tax’ change in itself, these changes will affect long-term savings providers such as UK life insurance companies who will need to focus efforts, should it become law, on attracting business from individuals rather than relying on employer group schemes.
  • This will also impact those groups whose business models focus on allowing easy switching of pensions into a single pot, as their services will be less required should a wider ‘Pot for Life’ become a legal right of an individual saver.
  • The increased clarity on the future of the LTA will be welcome news to long-term savings providers such that investment into systems to operationalise this change can continue. Going forward, this will also reduce the administrative burden on UK life insurance companies which will no longer need to report Lifetime Allowance certificates with HMRC.

Real Estate Investment Trusts

What was announced?

  • Following a consultation in 2021, the Government introduced legislation in 2022 and 2023 to modernise the regime and alleviate certain constraints and administrative burdens in relation to UK Real Estate Investment Trusts (“REITs”). Further legislation will be introduced to Parliament to address a third tranche of amendments to the law on REITs.

What does this mean?

  • Some changes are technical matters, such as making it possible to trace ultimate beneficial owners via intermediate holding companies or to clarify the definition of property financing costs, as well as amendments to ensure a condition for single commercial property REITs works as intended. 
  • Other changes are aimed at making the REIT regime more accessible, enhancing the UK REIT regime’s attractiveness for real estate investment and keeping pace with commercial practice. These include changes to the definition of ‘institutional investor’ requiring various collective investment entities to meet the diversity of ownership conditions, as well as changes to allow insurance companies to hold 75% or more of a UK REIT.

-  Ian Thomson & Will Hayter


What was announced?

A number of announcements in this year’s Autumn Statement will impact businesses in the Consumer sector, although it was disappointing to see there was little specifically aimed at supporting High Street retailers who are already under considerable pressure.

 The key announcements of relevance to the sector were:

  • No changes were made to reinstate the retail VAT export scheme and the associated airside scheme (tax-free shopping) for international visitors, although the government will continue to accept representations on this area.
  • Largest ever increases in cash terms to National Living wage with increases ranging from around 10% to 20% in some cases.
  • Plastic packaging tax increases in line with inflation.
  • Much publicity has already been given to the zero rating of VAT on reusable period underwear (AKA period pants), which was confirmed.
  • Full expensing relief for qualifying fixed asset expenditure was made permanent.
  • Expected Pillar 2 announcements were made following consultations and updated OECD guidance issued earlier in the year.
  • More information was released on the proposed merged R&D scheme, although there are still finer details lacking to enable businesses to assess the full impact of the changes.
  • The smaller business rate multiplier will remain frozen and the 75% rate discount for retail, hospitality and leisure (capped at £110,000) will continue for another 12 months for the 2024/25 period.


What does this mean?

Cost increases in relation to employees will clearly impact businesses in the sector with large workforces – whether this be shop floor, manufacturing, warehousing or other support functions.  This will bring further challenges in relation to managing pay increases and maintaining pay differentials and increasing pension contributions (given higher pensionable pay). More scrutiny and controls may be needed to ensure national minimum wage compliance remains in line with the complex rules and regulations, and further consideration given to implementing reward strategies that attract new talent and retain existing employees but which are affordable.

Permanent full expensing relief for qualifying capex will allow for better planning of large-scale capital projects such as store refits or new equipment for warehousing facilities.

As already expressed by the British Retail Consortium, the news on business rates is particularly disappointing for larger Consumer groups.  Their relief will be limited by a group-level cap of £110,000, so retailers with multiple properties are likely to have negligible levels of support. The High Street therefore remains under pressure, particularly where there are fewer independent traders who will benefit from this scheme extension.  Furthermore, the linking of CPI to the Uniform Business Rate multiplier is expected to increase the burden of rates on those businesses.

For large multi-national Consumer groups with turnover in excess of €750m, the clarifications in respect of Pillar 2 mean that groups will now be in a better position to review their compliance obligations and address necessary actions if they have not already started this process.  We also now have further information on the expected introduction of the Undertaxed Profits Rule, which allows HMRC to charge UK companies a top-up tax on the profits of any group members in low-taxed countries when the UK company is not the parent.  This may be particularly relevant for US-parented groups.

In summary, a mixed bag with no surprises, and further details are required in many areas to fully understand the impact of the measures set out by the Chancellor.

Claire Cowen

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