The UK Autumn Statement has been delivered by Chancellor, Jeremy Hunt. So what does it mean for those of us who live and work in Scotland? Here, the tax team from Brodies LLP outline the ‘Top ten tax takeaways’.

1 – Capital Allowances Full Expensing, introduced in the Spring 2023 Budget and expected to run until 2026, will now be made permanent. Under full expensing, qualifying plant and machinery expenditure will be deductible at either 100% (main rate assets) or 50% (special rate pool assets) in the year it is incurred. This is a major change to the capital allowances regime.

Only companies and partnerships with corporate members can claim full expensing. It will not apply to historical expenditure, R&D allowances or structures and buildings allowances. Businesses can also opt to not use full expensing. It is a “use it or lose it” regime: a claim must be made in the tax returns for the year in which expenditure is incurred.

The government will consult on further simplification to the capital allowances regime.

2 – National insurance – From 6 January 2024, Class 1 NICs, paid by employees, will be reduced from 12% to 10%. The self-employed will have to wait until 6 April 2024 to see a reduction to their NICs at which point Class 2 NICs will be abolished and the main rate of Class 4 NICs will drop from 9% to 8%. NIC thresholds are tied to income tax thresholds in the rest of the UK, with different rates and thresholds applying in Scotland (and yet to be fixed for 2024-25, in the Scottish Budget on 19 December).

Assuming the Scottish thresholds do not change, a Scottish taxpayer receiving a salary of £50,270 will have disposable income of £37,348 for the year in contrast to employees in the rest of the UK who will take home £38,960. A self-employed person in Scotland with profits of £50,270 will have a disposable income of £38,102 while those in the rest of the UK who are self-employed will be £1612 better off with after a disposable income of £39,714.

3 – The Freeport tax reliefs (enhanced capital allowances and structures and buildings allowances, NICs relief and SDLT relief) are to be extended from five to ten years (to 30 September 2031) for Freeports in England. For the Scottish Green Freeports and the Welsh Freeports it is expected that the tax reliefs, LBTT reliefs and LTT reliefs will also be extended from five to ten years, subject to agreement with the Scottish Government and the Welsh government.

The tax reliefs for Investment Zones in England will also be extended from five to ten years, and the UK government will work with the Scottish and Welsh governments to deliver a similar extension for the Investment Zones in Scotland and Wales.

4 – The business rates multiplier for small businesses in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be uprated by September CPI to 54.6p. The current 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties in England is being extended for 2024-25. As responsibility for business rates is devolved to the Scottish Parliament, these announcements do not apply to ratepayers in Scotland.

5 – The current R&D Expenditure Credit and R&D SME schemes will be merged for accounting periods after 1 April 2024, with the rate at 20%. The notional rate for loss making companies will be the small profits rate of 19%. Enhanced support will be provided to R&D intensive SMEs as previously announced in the Spring Budget.

6 – The alcohol duty rates will be frozen until 1 August 2024, meaning no increase in duty for beer, wine, cider, or spirits. This follows the introduction of the new alcohol duty rates in August this year.

7 – Following its announcement of the of the Energy Profits Levy (EPL) Energy Security Investment Mechanism (ESIM) in June 2023, the government has finalised its oil and gas fiscal regime covering the short, medium, and long-term. The new regime, to be introduced in a future Finance Bill, will include the principles for the tax treatment of oil and gas price shocks and provide tax relief for payments into decommission funds for Carbon Capture Usage and Storage CCUS.

8 – Income tax and capital gains tax reliefs available under the EIS and VCT schemes will be extended to cover share issues up to 6 April 2035. These reliefs had been due to cease to be available from 6 April 2025.

9 – While the annual investment limits for the wide range of Individual Savings Accounts available (ISAs, JISAs, LISAs and the less acronymic Innovative Finance ISAs) are not to be changed, there are a number of useful administrative changes. Within the limits, multiple subscriptions to the same type of ISA will be permitted; more in-year transfers between providers will be permitted; the lower age limit across the ISA range will be harmonised at 18; and it will no longer be necessary to re-apply for accounts which have become dormant. There are extensions of the funds (as opposed to individual shares) permitted as investments in Innovative Finance ISAs. Further digitalisation of ISA reporting is to be carried out.

10 – Deemed employers under off payroll working legislation (IR35) will be entitled to offset tax and national insurance contributions paid by a contractor, where the engagement was incorrectly treated as self-employed, from 6 April 2024.

Visit brodies.com for more information or to contact Brodies’ tax team.