We understand the importance of staying informed about tax policy changes. The Autumn 2023 UK Budget has introduced several significant updates that are crucial for businesses to note.

Embracing Enhanced Tax Reliefs

Annual Investment Allowance (AIA) Permanently Set at £1 Million

Businesses can now breathe a sigh of relief as the AIA has been permanently fixed at £1 million. This means your business can claim 100% tax relief on up to £1 million of expenditure on qualifying plant and machinery. This change is a major boon, especially for businesses planning significant investments in capital equipment.

Full Expensing – A Game Changer for Companies

An exciting development for companies is the introduction of ‘full expensing’. From 1 April 2023, companies can claim unlimited 100% upfront tax relief on new plant and machinery. This provision also includes a 50% allowance for specific types of plant and machinery, such as space and water heating systems. Notably, this regime is a permanent feature, marking it as a historic tax cut for businesses.

Digitalisation and Tax Compliance

Making Tax Digital (MTD) for Income Tax

MTD is set to revolutionise how businesses interact with HMRC. From April 2026, businesses, including sole traders and property landlords with gross income over £50,000, will need to keep digital records and send quarterly summaries to HMRC using MTD-compatible software. To simplify this transition, HMRC has announced design changes to the system, including cumulative quarterly updates and simpler rules for complex cases.

Addressing Late Payments in Business

Recognising the challenges of late payments in small businesses, the government plans to introduce stricter payment time requirements for firms bidding for large government contracts. From April 2024, these firms will have to demonstrate efficient invoice payments within a set average of days, progressively tightening over the years.

Upskilling for Business Growth

HMRC is set to revise its guidance on tax deductibility of training costs for sole traders and the self-employed. This move ensures that business leaders can confidently invest in skill development and stay abreast of technological advances and industry changes.

Simplifying Accounting for Unincorporated Businesses

From April 2024, the ‘cash basis’ becomes the default accounting method for unincorporated businesses, removing the £150,000 turnover limit and easing restrictions on interest deductions and loss relief. Businesses can still opt for the ‘accruals basis’ if preferred.

Investment Zones and Freeports

The government’s commitment to establishing 12 Investment Zones across the UK promises targeted tax and other incentives to boost productivity. Additionally, the extension of Freeport tax reliefs in England provides opportunities for businesses in port-based locations, offering VAT and Customs benefits.

The Autumn 2023 UK Budget presents a mix of opportunities and challenges for businesses. As always, MMG Chartered Accountants is here to guide you through these changes and help you make the most of these new provisions. Whether it’s leveraging tax reliefs, transitioning to digital tax systems, or navigating new accounting methods, we’re here to support your business every step of the way.