17 Nov 2022 2:32 PM

A number of tax increases and tax changes that will affect the taxation of companies in the UK have been unveiled today.  Some will come into effect sooner than others, some were announced by Jeremy Hunt in detail, others were left languishing in the fine print.

Let’s take a look at some of the changes announced today that will affect companies: -

Corporation tax changes: -

  • R&D tax credits changes (more info at Autumn Statement 2022 – Important R&D tax changes announced)
    • Cut to the SME additional deduction from 130% to 86%
    • Cut in the SME repayable credit rate from 14.5% to 10%
    • Increase in the RDEC credit rate from 13% to 20%
    • Reform of the R&D scheme being consulted on to move to single RDEC-like scheme
  • The rise in corporation tax rate to 25% from April 2023 will go ahead.
  • The Bank Corporation Tax surcharge will also go ahead as previously announced meaning that from April 2023 banks will be charged an additional 3% rate on their profits above £100 million.
  • Diverted Profits Tax is also being increased from April 2023 from its current rate of 25% to 31% in order to remain 6% above the main rate of corporation tax.
  • First year allowances for electric vehicle charge points will be extended to 31 March 2025.
  • Transfer Pricing changes also from April 2023 requiring large multinational businesses operating in the UK to keep and retain transfer pricing documentation in a prescribed and standardised format as set out in the OECD guidelines for Master File and Local File).
  • A consultation will be undertaken to look at reforming the audio-visual creative tax reliefs to build on the success of these reliefs to further incentivise the production of culturally British content and support the growth of audio-visual sectors.

Other existing taxes:-

  • The ATED (annual tax on enveloped dwellings) chargeable amounts will be increased by 10.1% for the 2023-24 ATED charging period.
  • The level at which employers start paying employer’s national insurance contributions for their employees is fixed at £9,100 from April 2023 until April 2028.
  • VAT registration and deregistration thresholds will not change until April 2026.
  • Introduction of an Income Inclusion rule (IIR), for accounting periods beginning on or after 31 December 2023, which will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15% in line with OECD Pillar 2 Framework.
  • Tariff suspensions will be suspended on over 100 goods for two years including goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.
  • Car and van benefit charges will increase in line with inflation from April 2023.
  • Business Rates will be increased from 1 April 2023 to reflect the updated property valuations. A package of support will help businesses to transition to their new bills. The ‘upward caps’ will be 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24, and will be applied before any other reliefs or supplements. Retail, hospitality and leisure businesses will benefit from increase rates relief from 505 to 75% up to £110,000 per business in 2023-24. A cap of £600 increase for the smallest businesses losing eligibility or seeing reductions in small business rates relief or rural rate relief from 1 April 2023.

New taxes/reliefs introduced: -

  • Introduction of a supplementary Qualified Domestic Minimum Top-up (QDMTT) tax rule, for accounting periods beginning on or after 31 December 2023, which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15% in line with OECD Pillar 2 Framework.
  • From April 2025 electric cars, vans and motorcycles will begin to pay Vehicle Excise Duty (aka road tax) in the same way as petrol and diesel vehicles.
  • Introduction of an Improvement Relief from business rates. The relief means that if a taxpayer makes qualifying improvements to a property they occupy (from 2024) their business rates will not increase for 12 months.

Windfall taxes: -

  • Energy Profits Levy will be increased from 1 January 2023 from 25% to 35%.
  • Introduction of an Electricity Generator Levy from 1 January 2023, a temporary tax at 45% that will be levied on extraordinary returns from low-carbon UK electricity generation.

If you require further information, please do contact us.

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