• Tim Sarson, Partner |
  • Sharon Baynham, Director |
10 min read

Hot on the heels of the party conferences we are now in the run-up to the Autumn Statement. As the nights begin to draw in, our policy team have put their thinking caps on and try to offer some insight into what we might expect. 

For those that have been sleeping under a rock for the last twelve months, we are now in an economy which is on the cusp of recession, public debt and debt interest is the highest it has been in generations, inflation is proving to be far stickier than anticipated and the tax take is at its highest level for 70 years. To top it all a general election looms which currently looks as though it will trigger a change of government. It is a gloomy autumnal outlook for the Chancellor.


In line with the general economic outlook, the Autumn Statement might be a similarly dour affair.

We are expecting it to be relatively light on tax announcements. The Chancellor has repeatedly said that cutting inflation is his priority, so tax cuts are unlikely. In bad news for individuals he has also indicated that if there is money available to cut taxes these would be focussed on business taxes to make the economy more competitive. At the Conservative party conference the Chancellor said even that discussion was ‘slightly academic’ because high interest payments mean there is unlikely to be any fiscal headroom. 

The money tree is looking distinctly bare. Nevertheless, recent official figures showed that government borrowing over the last six months has been almost £20bn lower than predicted. This, and the two recent by-election defeats for the conservative party, may strengthen the calls for tax cuts over the coming weeks.

With a general election only a year away, any tax announcements become deeply political in their nature. Despite media speculation, we think vote pleasing tax cuts will be saved for the Spring and that the Autumn Statement will be largely focussed on business. This doesn’t mean the Chancellor won’t start to warm up his audience by trailing what he hopes to do in a Spring pre-election give-away to disenfranchised voters still struggling with the cost of living.

So what can we expect?

Pipeline matters

There are a number of areas where the government has already been consulting which makes announcements in these areas more likely.

R&D merged scheme

The government released draft legislation for consultation in July merging the two R&D schemes currently available in the UK. The merged scheme will resemble the existing RDEC with the credit being an above the line item. The reforms reward the company funding the R&D rather than the company undertaking the activity, although it is still unclear whether companies can claim for subcontracted work by an overseas company. The SME scheme will be preserved for high intensity, loss-making R&D businesses with a payable credit for surrendered losses providing a net benefit of 27%.

If the proposals do go ahead, then we would expect similar rules to the Irish R&D regime to deal with subcontracted R&D to allow businesses to specify contractually who can make the claim. 

Prediction: Expect the R&D reform to be paused in the short term to allow further work on how subcontracted R&D could operate under a merged scheme.

OECD Base Erosion and Profit Shifting (BEPS)

We can also expect an update on the UK’s implementation of reforms to the international tax framework through the OECD’s BEPS project. The UK is committed to the OECD’s two pillar solution. The UK has already enacted legislation to implement the global minimum tax of 15% (Pillar two). September saw the most recent amendments published in relation to the UK’s proposed adoption of the Under Taxed Payments (UTPR) Rule (the backstop rule for undertaxed profit), as well as other changes to keep the UK legislation consistent with the evolving OECD rules. We may see further amendments to reflect more recent developments in the Administrative Guidance released by the Inclusive Framework of the OECD as well as obtaining clarity on when the UTPR legislation will be enacted in the UK. 

International work also continues on Pillar one, which applies to only the largest multinationals and will reallocate certain amounts of taxable profit to market jurisdictions. The OECD released a significant number of documents in relation to pillar one in October, in particular the text of a new multilateral convention (MLC) to implement Amount A. Whether Pillar one gets across the line globally is still up for debate and depends on its acceptance by a critical mass of jurisdictions – and in particular whether the US adopts it - so any statements on the UK’s position will be received with interest. 

Prediction: Expect an update on BEPS 2.0 regarding timing of the adoption of the UK legislation for the Under Taxed Payments Rule and potentially minor amendments to align the UK’s global minimum tax legislation with the latest OECD developments.

Back to work initiatives

In the Spring there were several announcements to encourage people back to work. Pension savings limits were eased and there was a big expansion of free childcare.

More recently the focus has been on the amount of people off work long-term sick, particularly since Covid. The government has been consulting on providing a form of ‘super-deduction’ for firms that provide certain types of healthcare, in particular regular health screenings and medical check-ups. 

We think it likely that the government will take this forward, but it will be interesting to see if they extend relief to the benefit-in-kind charge that is imposed on employees where their employer provides healthcare.

Prediction: A super deduction for employers who provide certain healthcare and relief from any associated benefit-in-kind charge will be announced.

Lord Harrington review

In March 2023 Lord Harrington was asked to undertake a review of how the UK can better attract foreign direct investment into key growth sectors. The findings were due in September and businesses will be keen to see how the government is going to respond. 

Business tax changes take longer to bed in because taxpayers have to plan how to take advantage of what is being offered. Time is running out for the government to take action, especially if the intention is to start showing a harvest before the election. 

Prediction: Expect an update on Lord Harrington’s findings around the time of the Autumn Statement. Expect it to be long on ambition but short on detail. 

Net Zero

Both the U and the EU have made significant announcements around incentivising green technology. The US introduced the Inflation Reduction Act which offered generous tax credits for green technology, alongside a degree of protectionism in terms of certain provisions only supporting domestic supply chains. The EU have also announced a New Green Deal which effectively allows some deviation from State Aid rules to encourage green initiatives to stay within the union. 

The UK has yet to show its hand in terms of a response to either of these initiatives. The Chancellor has promised this for the Autumn Statement although he has previously said that the UK will not follow the ‘subsidy bowl’ approach of the US.

Prediction: Expect an announcement on the UK’s response to US and EU initiatives to attract green investment but don’t expect big giveaways. It may be wrapped up with Lord Harrington’s report. Again, the ambition may be there, but the measures announced may fail to inspire.

What Business would like to see

Full expensing

Whether you attended the conservative party conference or the labour one, a key theme at both was economic growth. Growth in the UK, in line with other developed economies, has languished. 

The UK’s attractiveness as an investment location has taken a knock in recent years. In part this is due to political uncertainty over the last few years, but the increase in the headline rate of corporation tax to 25% and the late announcement of a replacement for the super-deduction (temporary full-expensing) didn’t help.

In recent weeks there has been some speculation as to whether full-expensing will be made permanent. This is something that the Chancellor said he wanted to do when he first announced the measure in the Spring, but fiscal rules prevented it.

Perhaps the biggest surprise of full-expensing, and its predecessor the super-deduction, is the agnostic nature of the relief. Neither were targeted on particular sectors or activity. For a government that has wider objectives such as levelling up or the four E’s (Enterprise, Education, Employment and Everywhere), this felt like a missed opportunity.

Businesses will be keen for the full-expensing to become a permanent feature of the tax system. Whether the government can afford to do that remains to be seen. A halfway house might be to offer an enhanced deduction but in priority areas.

Prediction: Full-expensing will not be made permanent and, as it will remain a temporary measure, no attempt will be made to target it. 

Business certainty

A key theme of Labour’s current offering on business tax is to create an environment which will create more stability and certainty, thereby increasing investment. It has announced that it will put in place a Roadmap for Business Taxation. 

It is possible that the conservatives may offer something similar. It would align well with Lord Harrington’s work would cost nothing.

Prediction: Despite the easy win this appears to be, it is unlikely.

Business rates

A review of business rates has been in the pipeline for years. It is constantly kicked into the long grass and remains one of those areas of our tax system that is crying out for reform but nobody quite knows what to do. 

It is a regular feature in our predictions and so it would be a shame for us not to mention it here. 

Prediction: Business rates reform will once again be kicked into the long grass.

Personal tax measures

Inheritance Tax and Stamp Duty

If the Chancellor really wants to shake things up pre-election he would need to cut the basic or higher rate of income tax, or raise the higher rate threshold as has also been mooted. All of these would cost significant amounts and strip the money tree free of any remaining leaves.

Rumours are circulating that the conservatives will abolish inheritance tax (IHT) or stamp duty. The attractiveness of either of these is that they would not be inflationary in the same way a cut to income tax or VAT would be. The fiscal impact of either, whilst not insignificant, is potentially manageable. IHT raises approximately £7bn although this is expected to rise to £15bn in the next 10 years. 

Either of these (we think it is unlikely the government would do both) could risk some blowback. Abolishing IHT could be perceived as benefitting the wealthy, whilst a cut to stamp duty might highlight the UK’s insufficient housing supply, which Labour could capitalise on. 

Nevertheless, we think that the Chancellor will be unable to resist abolishing or phasing out IHT. Conservative plans to lift all but the very wealthiest out of IHT was a key plank of the 2015 election campaign. IHT is an unpopular tax even though the vast majority of people don’t pay it. If the Chancellor wants to deliver some good news that especially benefits disenfranchised conservative voters this may well be it. The challenge will be how the government will fund any change such as the removal of CGT uplift on death, an IHT charge on certain undrawn down pensions or the introduction of a gift tax are possible measures that have been mooted in the past.

Larger tax cuts will wait until the Spring Budget when the general election is just around the corner.

Prediction: There will be an announcement on the abolition or phasing out of IHT in 2024

Other reforms

With Labour starting to set out their election pitch, particularly in the area of personal taxes, it is possible that the government will steal a march on some of their policies.

Labour has already announced that it will end non-domicile status if it wins the next election. A similar generous regime in Portugal is being abolished and Italy are also reconsidering their regime. 

Labour have also announced that they will end the capital gains treatment of carried interest for private equity. 

The conservatives could announce reviews of either of these areas although the non-dom regime would seem more likely.

Prediction: A review of the non-dom regime will be announced.


When we started thinking about Autumn statement predictions we were expecting a damp squib befitting this damp season. But then we remembered politics, and the looming general election. So whilst we expect rather limited change to most areas of business taxation we think the government won’t be able to resist one or two colourful announcements and don’t rule out surprises out of leftfield either.