Autumn Statement: Other tax measures

As well as the key measures discussed elsewhere, there were a number of other announcements of interest in the Autumn Statement. These are covered briefly in this article and include Pillar Two, business rates, stamp taxes and expansion of the cash basis. 

The Chancellor reinforced his commitment to the UK’s domestic implementation of Pillar Two with effect from accounting periods beginning on or after 31 December 2023. This is intended to ensure that in-scope multinational enterprises will be subject to a minimum 15 percent effective tax rate in every jurisdiction in which they operate.

Technical amendments to the already enacted UK Pillar Two legislation (the Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT) rules) that reflect recent administrative guidance published by the OECD and other stakeholder input will be included in the Autumn Finance Bill 2023, to take effect for accounting periods beginning on or after 31 December 2023.

The Undertaxed Profits Rule (UTPR), the backstop to the MTT rule, will be introduced in the UK with effect for accounting periods commencing on or after 31 December 2024 (a year later than the MTT and DTT rules). Legislation for the UTPR will be included in a future Finance Bill.

The UK’s ORIP rules will be repealed in respect of income arising from 31 December 2024 alongside the introduction of the UK’s UTPR in a future Finance Bill, given the expectation that the UTPR will more comprehensively discourage the arrangements that ORIP was aimed at.

The Government now expects that the UK’s Pillar Two combined measures will raise approximately £12.7 billion in the UK over the next six years.

In respect of business rates in England, the Government has confirmed that for 2024-25 the small business multiplier will continue to be frozen and the standard multiplier will be uprated by the September consumer price index. As a result, the standard multiplier of 51.2p will increase by 6.7 percent to 54.6p, effective from 1 April 2024. In addition the current 75 percent relief for eligible Retail, Hospitality and Leisure (RHL) properties will be extended.

Transfers of shares that are admitted to trading on a recognised growth market (such as AIM) are not subject to stamp duty or SDRT, providing the shares are not listed on the main market or any other market. Currently, HMRC cannot approve an application to be a recognised growth market unless the market is a recognised stock exchange and the majority of companies admitted to trading on it have a market capitalisation of less than £170 million, or under the terms of admission companies meet a 20 percent compound growth test.

In order to enable more growing companies to benefit from having shares that can be traded without stamp taxes, FCA regulated multilateral trading facilities will also potentially qualify as a recognised growth market and the market capitalisation threshold will be increased to £450 million. The changes will take effect from 1 January 2024. Any markets which anticipate meeting the revised criteria from this date should consider making the appropriate application for recognition to HMRC.

HMRC confirmed on 14 September 2023 that the 1.5 percent stamp duty and SDRT charges on the issue of new capital into clearance and depositary systems would be removed from the statute with effect from 1 January 2024. The draft legislation has now been amended to include initial transfers of shares to such systems if the transfers relate to a listing and HMRC have confirmed that the amendments will have statutory effect under the relevant provisional collection of taxes provisions from 1 January 2024. It was initially thought that even if HMRC would not in practice have collected the tax, the removal of these charges would not strictly have effect until Royal Assent to the Finance Act 2024, which was causing uncertainty in the market.

The simplified cash basis can be used by certain small businesses to calculate trading taxable profits. The current regime is subject to certain restrictions which the announcement made in the Autumn Statement seeks to remove, thereby making it easier for eligible businesses to calculate their taxable profits.

From 6 April 2024, the cash basis will become the default method for calculating taxable trading profits, thereby simplifying the calculation. (Eligible businesses will have to elect to use the accruals basis in future.) 

The following restrictions will also be removed:

• The turnover threshold - currently a business can only join if turnover is less than £150,000 and are forced to leave when turnover exceeds £300,000;
• The amount of interest (including incidental costs of finance) that is incurred wholly and exclusively for the purposes of the trade - currently only up to £500 is deductible; and
• Claims for loss relief - currently losses cannot be offset against other income but can only be used against future profits of the same trade (or against profits of the previous three years if the business has ceased).

The aim of these changes is to encourage the use of the cash basis where it is more appropriate, by extending eligibility and making the rules easier to understand and apply.

It should be noted that there remain restrictions on the types of businesses that can use the cash basis. The main entities that are ineligible are companies, property businesses, limited liability partnerships and partnerships with at least one corporate partner.