Autumn Statement Special Part 3 -Energy Levies & Corporate Tax changes
Energy Levies
From the 1st of January 2023, the Energy Profits Levy (EPL) rate will rise by 10 percentage points to 35% and will be extended to the 31st of March 2028. The investment allowance will be reduced to 29% for all investment expenditures (other than decarbonisation expenditure) broadly maintaining its existing cash value. Decarbonisation expenditure will continue to qualify for the current investment allowance rate of 80%.
The government will legislate for these measures in Autumn Finance Bill 2022, except for the changes related to decarbonisation expenditure which will be legislated for in Spring Finance Bill 2023.
Corporate Tax changes
Announcements were made on the reforms to R&D tax reliefs. For expenditure on or after the 1st of April 2023, the Research & Development Expenditure Credit rate will increase from 13% to 20%, the SME additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. The government is continuing its review of R&D tax reliefs that were launched in Budget 2021 and will consult on the design of a single scheme.
In reforming the audio-visual creative reliefs, the government has launched a consultation on a series of proposals that will go further to incentivise and support the growth of the audio-visual sectors, ensuring these highly skilled industries continue to thrive in the UK.
OECD Pillar 2 – following consultation, the government will implement the globally agreed G20-OECD Inclusive Framework Pillar 2 framework in the UK. For accounting periods beginning on or after 31 December 2023, an Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up (QDMTT) tax will be introduced. This will be legislated for in Spring Finance Bill 2023.
Following confirmation of the increase in Corporation Tax to 25% from April 23, consequential changes to the Bank Surcharge and Diverted Profits Tax will be made to ensure that the same differential in rates will apply. In addition, as previously announced, the ￡1 million level of the Annual Investment Allowance is being made permanent.
In part 4 Autumn statement newsletter we will break down Stamp Duty Land Tax (SDLT) and Avoidance and evasion.