To increase business investment, the government has announced a number of measures which could raise around £20 billion per year from businesses in a decade’s time. The changes include:
- Full Expensing will be made permanent.
- The removal of barriers to critical infrastructure by reforming the UK’s inefficient planning system and speeding up electricity grid connection times.
- A package of pension reform and driving private investment from insurers into infrastructure by legislating for key reforms to Solvency II.
- Making £4.5 billion available in strategic manufacturing sectors such as auto, aerospace, life sciences and clean energy from 2025 for five years.
- New Investment Zones.
- From April 2024, firms bidding for government contracts over £5 million will have to demonstrate that they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025 and then 30 days in future years.
- Changes to Research and Development.
Business Rates
Comment: Further action may be needed to reduce the unacceptably high levels of non-compliance with the R&D rules and HMRC will be publishing a compliance action plan.
Corporation tax rates
The government has confirmed that the rates of corporation tax will remain unchanged, which means that, from April 2024, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by
a marginal relief, providing a gradual increase in the effective corporation tax rate.
VAT
The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively.
In addition, the government will extend the scope of the current VAT zero rate relief on women’s sanitary products to include reusable period underwear from 1 January 2024.
Other business measures
A number of other measures have been announced:
- Making the cash basis of accounting the default position for the self-employed from 2024/25, with an alternative to opt for the accrual’s basis, together with technical changes to the regime.
- A number of changes to strengthen the Construction Industry Scheme from April 2024.
Making Tax Digital
The government has announced the outcome of the review into the impact of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) on small businesses which includes maintaining the current MTD threshold at £30,000 and design changes to simplify and improve the system. These changes will take effect from April 2026. The government will also ensure taxpayers who join MTD from 6 April 2024 are subject to the government’s new penalty regime for the late filing of tax returns and late payment of tax.
If you would like to find out more about how the changes in business tax and business rates will affect you, please do contact us by calling 01623 490 120 or email