Research & Development (R&D) tax relief
R&D tax reliefs are to be reformed from April 2023 to support modern research methods by expanding qualifying expenditure to include cloud computing and data costs.
The Chancellor announced that Government support provided to businesses via the R&D regime is to be refocused towards domestic activity, noting that past funding had subsidised billions of pounds of R&D that was happening outside of the UK.
Further details of these changes will be communicated later in the autumn and will include measures to target abuse of the system and improve compliance.
The HGV Levy was originally introduced in 2014 but has been suspended for 24 months from 1 August 2020 to 31 July 2022. The Chancellor announced that the suspension will be extended for a further 12 months to 31 July 2023.
This will apply to registered keepers of HGVs registered in the UK, and drivers and owners/operators of HGVs from outside the UK accessing the UK road network. Vehicle Excise Duty on HGVs will also continue to be frozen into 2022/23.
A series of reforms to the business rates regime was announced.
- From 2023, property revaluations will take place every 3 years instead of every 5 years;
- The retail, hospitality and leisure sectors will be given a 50% discount on business rates for one year, up to a maximum of £110,000 per business;
- From April 2023, businesses will be able to make property improvements and not have to pay additional business rates for a period of 12 months following the completion of the improvement works;
- Relief will be given for green technologies, including energy generation (e.g. solar panels) and storage as well as eligible heating networks; and
- Finally, the planned increase in the business rates multiplier has been cancelled and will instead be frozen for 2022-23.
Annual Investment Allowance (AIA) extension
The Government is extending the temporary £1 million level of the AIA to 31 March 2023. This will provide unincorporated businesses with more upfront support.
The extension, combined with the super deduction available for corporates, should encourage all businesses to bring forward investment.
With these measures due to end on 31 March 2023 and corporation tax rates increasing to 25% on 1 April 2023 for companies with profits in excess of £50,000 (or even lower where there are associated companies), careful consideration should be given to the timing of future expenditure to ensure capital allowances are claimed in a tax efficient manner. We can provide assistance with this.
Residential Property Developer Tax (RPDT)
As announced in February 2021, the Government will introduce a new tax from April 2022 on the profits that companies and corporate groups derive from UK residential property development, to ensure that the largest developers make a fair contribution to help pay for building safety remediation. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million.
Annual Tax on Enveloped Dwellings (ATED)
The ATED charges automatically increase each year in line with inflation. The ATED annual charges will rise by 3.1% from 1 April 2022 in line with the September CPI.
Recovery Loan Scheme
The Recovery Loan Scheme will be extended until 30 June 2022. This scheme is already available to small and medium-sized businesses and provides finance of up to a maximum of £2 million per business. The government guarantee will be reduced from 80% to 70%.
Online Sales Tax Consultation (OST)
The Government will continue to explore the arguments for and against a UK-wide OST and a consultation will be published shortly. If introduced, the revenue from an OST would be used to reduce business rates for retailers in England.