Hazel Platt, Head of Tax at Grant Thornton UK LLP, said:
“The release of the latest inflation figures last week catalysed a rapid change in the government’s narrative. A week ago, tax cuts of any kind seemed unlikely – today’s Autumn Statement unveiled a smorgasbord of tax incentives and reductions. Alongside the halving of inflation, additional fiscal headroom provided by today’s OBR outlook handed the Chancellor an opportunity to hail an “Autumn Statement for Growth”. The Chancellor’s focus is now full steam ahead on growth driven firmly by business investment and stimulating employment.
“In support of business investment, the Chancellor made full expensing for relevant capital expenditure permanent, giving businesses tax relief at 25p for every pound spent. This change provides businesses with greater certainty and stability and should encourage further investment. He also confirmed the merging of the SME R&D Scheme with RDEC. This is a substantial reform with an ambitious implementation timetable, and there’s lots to work through in the details to understand who the “winners and losers” from this reform may be. Measures were also announced to introduce new Investment Zones and extend the tax relief timeframe from five to ten years (for investment zones and freeports).
“A key theme of the Statement was ‘making work pay’ with headline announcements on cuts to National Insurance with a 2-percentage point drop for employees (Class 1), abolition of Class 2 and reduction of Class 4 by 1 percentage point. It was encouraging to see an increase in the National Living Wage and further support for apprenticeships with an additional £50m announced to support skills development in key growth areas. Beyond the National Insurance support for the self-employed there were further measures to help small businesses including business rates support.”