15.11.2023 | Tax

A look ahead to the budget: Fuel duty rumours, wage rises, and a crack-down on Umbrella companies

Autumn Statement – when is it, and how will it affect me?

This month brings the autumn budget in which The Chancellor, Jeremy Hunt, is set to make a raft of announcements that will impact households and businesses.

As usual in the run-up to the speech, many rumours abound about what will be introduced and how new measures will impact different groups.

There are also some elements of the budget that were already confirmed at the Conservative Party Conference.

Here, head of taxation at Beatons, Andrew Diver, looks ahead to November 22nd with an overview of changes that could come into force.

Minimum Wage

This is a virtual certainty, and its mention in the budget is simply a formality. The increase to the national minimum wage was announced at the Conservative Party Conference in October. It is set to increase to at least £11 an hour from next April.

In a speech to the Conservative Party conference, Jeremy Hunt said the move would benefit two million of the lowest-paid workers.

Capital Allowances

In Spring, The Chancellor announced that he would like full relief to be given on initial plant and machinery expenditure eligible for Capital Allowances to be made permanent, but at that time, his fiscal rules prevented this. It is, however, likely following improvements to Treasury forecasts that this permanent change could be confirmed on the 22nd.  It would give business confidence for longer-term capital investment projects and help businesses with longer-term planning. Full Expensing, subject to a Finance Bill approval, provides companies incurring qualifying expenditure between 1 April 2023 and 31 March 2026 with at least a three-year foresight of investment planning over the two years that the Super-Deduction provided.

Unfortunately, unincorporated businesses will not benefit from the new Full Expensing rules but are entitled to claim the AIA, which offers the same benefits as Full Expensing for the investments it covers up to £1 million of qualifying expenditure per year.

Merge of Tax credit schemes

It is thought that the Chancellor will announce the long-planned merger of SME & RDEC (large company) R&D tax credit schemes. Generally, there are now many more checks in place, so R&D tax relief is becoming increasingly difficult to obtain. However, the Government state the merger is about simplifying and improving the competitiveness of the schemes.

The concept of the UK having a single above-the-line R&D tax relief is attractive to many as it should simplify the rules, while reducing the cost of administering it, helping to make the UK more competitive in innovative industries and sectors.

Real Time Information reporting and pay advances

Real Time Information (RTI) is when employers and pension providers inform HMRC about PAYE payments made as part of the payroll process.

Inflationary pressures and the cost of living mean some employers have been providing their staff with monthly pay advances. Unfortunately, RTI payroll reporting means if you do this as an employer, then you have to report it either before, or when, the payment is made.

Now, consultations are taking place on relaxing these rules so that the monthly RTI report can be generated to include any pay advances and cut down on the additional reporting and admin. Reform on this could be announced this autumn.

Changes to customs duties

There is hope for news on Customs Duty procedures as the UK develops its systems following Brexit. This has been drawn out to date, but it is hoped there is progress towards delivering better IT systems and structure to streamline the current processes (such as the red and green channel approach for Northern Ireland). Extending the exemption from the 10% import duty for electric car batteries (currently due to expire on 31 December 2023) may also be on the list of announcements.

Fuel Duty Rumours

There are rumours that there could be a 2p in the £1 increase in fuel duty. This is the level the Treasury suggest is required to make up for the 5p cut in duty following Covid. But, caution on this rumour is urged as the fuel duty hasn’t been increased for 13 years, so this could be a red-herring leak, allowing The Chancellor to say: “I am on the side of working people and we are not going to put an extra tax on you during this cost of living squeeze.”

Umbrella Companies

Most budgets include some anti-avoidance rules, and this year it seems plans could be announced for a clamp down on umbrella companies as HMRC is thought to be concerned they are being used for widescale tax abuse.  More rules and regulations will likely be introduced in relation to their use.

If you’d like to discuss anything that has the potential to affect your business, please call Beatons highly experienced team on 01473659777. Or email info@beatons.co.uk