Business tax and national insurance cuts revealed in Autumn Statement

Business investment tax relief has been made permanent and national insurance has been cut by two per cent, following today's Autumn Statement.

The main rate of national insurance will be cut by two points to ten per cent from January 6 at a cost of £9bn while a scheme which gives companies tax relief on capital investments will be made permanent.

The capital expensing scheme, which was due to expire in 2026, allows a company to immediately deduct all of its spending on IT equipment, plant or machinery from taxable profits.

Chancellor Jeremy Hunt also announced plans to sell the government’s entire holding in NatWest by 2025-26 subject to market conditions.

Brendan Sharkey, Construction and Real Estate Specialist at MHA, says that the Chancellor should have announced stamp duty cuts to shake up the housing market: “Housebuilding and help for young people and first-time buyers was absent from the statement. It’s a shame the Chancellor didn’t announce cuts to stamp duty. This would have created demand and at the same provided much needed affordable properties.

“We also need policies to help young people or first-time buyers get into the property market at a time when interest rates and renting are high. Affordable housing needs more support and investment, which should have been an area of focus.”

“There were some very positive developments though. The unfreezing of the local housing allowance, fixed since 2020, provides an element of relief for families who are on low income and struggling to find affordable housing or pay their rent.

“Permitted development will now extend to enable one property to be converted in two flats, thereby increasing the supply of new homes, though building controls will need to be upheld during this process. Finally the planning application reforms should speed up the process of new projects and recoverable costs will ease concerns if project deadlines are not met. However, will the Local Authorities have enough resource or will those that pay the piper get priority and the application from smaller SMS’s get overlooked?”

Johnathan Dudley, Partner and Head of Manufacturing Business at Crowe, said: “The much-anticipated extension of full expensing may not directly benefit SMEs, but it at least confirms full tax deduction in the future... unless, of course, another chancellor reverses it.

“The measures for R&D need close examination, but when referring to life sciences, seem ominous for a manufacturing sector already struggling with a more robust R&D regime, and one which our research implies is disincentivising investment in innovation in the sector.”

The Chancellor also said the Office of Budget Responsibility (OBR) expected the economy to grow by 0.6 per cent this year and 0.7 per cent next year. 

The Bank of England expects inflation to remain flat next year. 

The state pension would also rise by 8.5 per cent in April and that universal credit and other benefits would increase by 6.7 per cent in line with September inflation.

Paul Lavercombe, Head of Tax for BDO LLP in the South East, said: “In the lead up to this Statement, the chancellor had warned that tax cuts were ‘virtually impossible’ but the mood music changed significantly in the last week or so, and for business, this has arguably been a more upbeat announcement than anticipated.

“The “giveaways for growth”, such as extending full expensing on investments in IT, machinery and infrastructure, have responded to demand from businesses for a greater focus on creating economic certainty over the long-term. However, with a General Election looming, it remains to be seen whether today's announcements will be enough to create widespread confidence and incentivise business investment.  

“Beyond the headline tax changes, businesses were calling for wider support to ease their day-to-day burdens including further investment in HMRC to improve service levels and measures designed to simplify the tax system. Many may be disappointed that the chancellor didn’t go far enough in this regard.”

Commenting on the Autumn Statement, Philip Campbell, Commercial Director at MEPC Milton Park, said:

“The simplified tax relief announced for R&D intensive SMEs, plus the Government’s acceptance of the Oxford University-led spinout review, will drive investment and support the UK’s ambition of becoming a science and tech superpower by 2030.

“Additionally, the commitment to deliver £520 million for life sciences manufacturing will help to capitalise on the UK’s world-leading R&D capabilities across leading innovation clusters, like we have here at Milton Park in Oxfordshire. 

“Together, we believe this will strengthen the demand for flexible laboratory and commercial space, which can be unlocked through quick, flexible planning arrangements such as the ten-day Local Development Order in place at Milton Park." 

Business West Gloucestershire director added: "Business was given a huge boost by Chancellor  Jeremy Hunt’s autumn statement.And I don‘t think he was underestimating that boost when he said that it was the largest government package ever to help business in British history with 110 areas of help.

"Employees’ National Insurance will be cut from 12 per cent to 10 pere cent on January 6 which would save a worker earning £35 000 a year £450.

"And that in turn would mean an extra 94 000 jobs being filled.

"Planning is a huge issue for companies wishing to expand and the Chancellor said he would be providing £32 million to ensure quicker approval permissions.

"And as predicted, the Chancellor made a very big invitation to firms wishing to invest to grow by extending the full expensing initiative to allow firms to claim back tax on  their profits .

"He also announced an extra £50 million for skills development"