The Chancellor has published the Autumn Statement. The key measures for charities are outlined below and the overall announcements are also summarised here.

CTG Chair, Richard Bray, commented:

“The support that charities give to all parts of society, particularly at a local level, is critical to many people, but charities also need support in these challenging times.  It is worrying that there was no recognition in the Chancellor’s statement of the role played by charities and yet demands on their services continue to rise at a time when donors have less disposable income. CTG will continue to argue that the tax system needs positive change to support the work of charities.”

Commenting on the specific Budget announcements, he said:

“More people will find themselves paying higher-rate tax in the coming years so the tax reliefs that encourage giving need to be clearly signposted and to operate as effectively as possible. A key priority for CTG is ensuring that Gift Aid is fit for the future and we urge HMRC to continue to invest time and resources into the Future of Gift Aid project.

“It is welcome that there was no increase in VAT, but freezing the registration threshold will result in more charities being subject to VAT. CTG calls on the Government to provide important support to the sector by introducing a special reduced VAT rate on their purchases, allowing them to do more with their hard-earned resources.

“CTG continues to be concerned about the R&D tax credit system and urges the Government to reintroduce the relief for charity-funded research through the tax system.”

Policy measures

Review of the Energy Price Guarantee (EPG) – From April 2023, the government will adjust the EPG, which places a limit on the price households pay per unit of gas and electricity. This means that a typical household in Great Britain will pay £3,000 per annum (up from the current £2,500 per annum) from April 2023 to April 2024, saving £14 billion of government spending. Equivalent support will continue to be provided in Northern Ireland. The government will keep the EPG under review and may revisit the parameters of the scheme, for example if the forecast cost increases significantly. The government will consult on amending the scheme as soon as is feasible after April 2023 so that those who use very large volumes of energy have their state support capped, whilst the vast majority of households can continue to benefit.

New approach to consumer protection post April 2024 – The government will work with consumer groups and industry to consider the best approach to consumer protection from April 2024, including options such as social tariffs, as part of wider retail market reforms.

Alternative Fuels Payment (AFP) – The government will double to £200 the level of support for households that use alternative fuels, such as heating oil, liquefied petroleum gas (LPG), coal or biomass, to heat their homes. This support will be delivered as soon as possible this winter. The government will provide this payment to all Northern Ireland households in recognition of the prevalence of alternative fuel usage in Northern Ireland. The government will also provide a fixed payment of £150 to all UK non-domestic consumers who are off the gas grid and use alternative fuels, with additional ‘top-up’ payments for large users of heating oil based on actual usage.

Review of the Energy Bill Relief Scheme (EBRS) – A HM Treasury-led review of the EBRS will determine support for non-domestic energy consumers, excluding public sector organisations, beyond 31 March 2023. The government has today published terms of reference for the review, with the findings to be published by 31 December 2022.

Cost of Living Payments – The government will provide households on means-tested benefits with an additional £900 Cost of Living payment in 2023-24. Pensioner households will receive an additional £300 Cost of Living payment, and individuals on disability benefits will receive an additional £150 Disability Cost of Living payment in 2023-24. These payments will be made on a UK-wide basis.

Uprating of benefits – The government is increasing benefits in line with inflation, measured by September CPI which is 10.1% this year. This includes increasing the State Pension by inflation, in line with the commitment to the Triple Lock. The standard minimum income guarantee in Pension Credit will also increase in line with inflation from April 2023 (rather than in line with average earnings growth).

Raising the benefit cap – The benefit cap will be raised by 10.1%, in line with September CPI, so that more households will see their payments increase as a result of uprating from April 2023.

National Living Wage (NLW) and National Minimum Wage (NMW) 2023 Uprating – Following the recommendations of the independent Low Pay Commission (LPC), the government will increase the NLW for individuals aged 23 and over by 9.7% to £10.42 an hour from 1 April 2023. This represents an increase of over £1,600 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2 million low paid workers. The government has also accepted the LPC’s recommendations for the other NMW rates to apply from April 2023, including:

• Increasing the rate for 21-22 year olds by 10.9% to £10.18 an hour;
• Increasing the rate for 18-20 year olds by 9.7% to £7.49 an hour;
• Increasing the rate for 16-17 year olds by 9.7% to £5.28 an hour;
• Increasing the apprentice rate by 9.7% to £5.28 an hour; and
• Increasing the accommodation offset rate by 4.6% to £9.10 an hour

Income tax and National Insurance contributions thresholds – The income tax Personal Allowance (PA) and higher rate threshold (HRT), and the National Insurance contributions (NICs) Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) are already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028. From July 2022 the NICs Primary Threshold (PT) and Lower Profits Limit (LPL) were increased to align with the PA and will be maintained at this level from April 2023 until April 2028. The Class 2 Lower Profits Threshold (LPT) will also be fixed from April 2023 until April 2028 to align with the LPL. The PA, PT, LPL and LPT will remain at £12,570 and the HRT, UEL and UPL will remain at £50,270. The PA and NICs thresholds apply across the UK. The HRT for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland, and the HRT for savings and dividend income will apply UK-wide. The government will legislate for the income tax measures in Autumn Finance Bill 2022, and NICs
changes in affirmative secondary legislation in early 2023.

National Insurance contribution rates and thresholds for 2023-24 – The government will fix the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) at 2022-23 levels in 2023-24.

Inheritance tax nil-rate band and residence nil-rate band – The inheritance tax nilrate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further 2 years until April 2028.

Income tax additional rate threshold – The income tax additional rate threshold (ART) will be lowered from £150,000 to £125,140 from 6 April 2023. The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. The ART for savings and dividend income will apply UK-wide.

Dividend Allowance and Capital Gains tax Annual Exempt Amount – The government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023, and to £500 from April 2024, and reduce the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.

Married Couples’ Allowance and Blind Persons Allowance – The government will uprate the Married Couple’s Allowance and Blind Person’s Allowance by the September CPI figure of 10.1% for the 2023-24 tax year.

Stamp Duty Land Tax cuts – On 23 September 2022, the government increased the nilrate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000. This will now be a temporary SDLT reduction until 31 March 2025.

Enveloped Dwellings (ATED) – The annual chargeable amounts for the ATED will be uplifted by the September CPI figure of 10.1% for the 2023-24 ATED charging period.

Council Tax flexibility – The government is giving local authorities in England additional flexibility in setting council tax by increasing the referendum limit for increases in council tax to 3% per year from April 2023. In addition, local authorities with social care responsibilities will be able to increase the adult social care precept by up to 2% per year.

National Insurance contributions Secondary Threshold – The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.

Increasing the rate of Diverted Profits Tax – From April 2023, the rate of Diverted Profits Tax will increase from 25% to 31%, in order to retain a 6 percentage points differential above the main rate of Corporation Tax, and therefore ensure that it remains an effective deterrent against diverting profits out of the UK.

Maintaining the VAT registration and deregistration thresholds at the current
levels for an additional 2 years – The VAT registration (£85,000) and deregistration thresholds will not change for a further period of 2 years from 1 April 2024.

OECD Pillar 2 – Following consultation, the government will legislate to implement the globally agreed G20-OECD Inclusive Framework Pillar 2 framework in the UK. For accounting periods beginning on or after 31 December 2023 the government will:

• Introduce an Income Inclusion Rule (IIR) which will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%
• Introduce a supplementary Qualified Domestic Minimum Top-up (QDMTT) tax rule which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%. Both the IIR and QDMTT will incorporate the substance based income exclusion that formed part of the G20-OECD agreement

The government intends to implement the backstop Undertaxed Profits Rule in the UK, but with
effect no earlier than accounting periods beginning on or after 31 December 2024.

Tariff suspensions – Following applications from business stakeholders, this measure will remove tariffs on over 100 goods for two years to help put downward pressure on costs for UK producers. The measure will remove tariffs as high as 18% on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.

VED on Electric Vehicles (VED) – From April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles.

Company Car Tax (CCT) Rates – The government is setting rates for Company Car Tax until April 2028:

• appropriate percentages for electric and ultra-low emission cars emitting less than 75g of
  CO2 per kilometre will increase by 1 percentage point in 2025-26; a further 1% in 2026-27
  and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric
  cars and 21% for ultra-low emission cars
• rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to
  a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28

First Year Allowance for Electric Vehicle Chargepoints – The government will legislate  to extend the 100% First Year Allowance for electric vehicle chargepoints to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

Additional Compliance Resource for HMRC – The government is investing a further £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers. The government remains committed to ensuring HMRC has sufficient funding to enable it to maintain its compliance performance over time, while continuing to make efficiencies.

Online Sales Tax (OST) – Following consultation, the government has decided not to introduce an OST, an idea put forward by certain stakeholders in the context of Business Rates reform. The government’s decision reflects concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models. A response to the OST consultation will be published shortly.

Business Rates: Overall Package – From 1 April 2023, business rate bills in England will be updated to reflect changes in property values since the last revaluation in 2017. A package of targeted support worth £13.6 billion over the next 5 years will support businesses as they transition to their new bills, protect businesses from the full impact of inflation, and support high streets. English Local Authorities will be fully compensated for the loss of income as a result of these business rates measures and will receive new burdens funding for administrative and IT costs.

Business Rates: Multiplier Freeze – The business rates multipliers will be frozen in 2023-24 at 49.9 pence and 51.2 pence, preventing them from increasing to 52.9 pence and 54.2 pence.

Business Rates: Transitional Relief Scheme – Upwards Transitional Relief will support properties by capping bill increases caused by changes in rateable values at the 2023 revaluation. This £1.6 billion of support will be funded by the Exchequer rather than by limiting bill decreases, as at previous revaluations.

Business Rates: Retail, Hospitality and Leisure Relief – Support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24.

Business Rates: Supporting Small Business Scheme (SSBS) – Bill increases for the smallest businesses losing eligibility or seeing reductions in SBRR or Rural Rate Relief (RRR) will be capped at £600 per year from 1 April 2023.

Business Rates: Improvement Relief – At Autumn Budget 2021 the government announced a new improvement relief to ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy. This will now be introduced from April 2024. This relief will be available until 2028, at which point the government will review the measure.

Reforms to Research and Development (R&D) tax reliefs – For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

Regulatory Reform for Growth – The government will review retained EU law to identify changes that can be made over the next year with the greatest potential to unlock growth in key growth industries – digital technology, life sciences, green industries, financial services, and advanced manufacturing. The government will also task the Government Chief Scientific Adviser and National Technology Officer (Sir Patrick Vallance) to lead work to consider how the UK can better regulate emerging technologies, enabling their rapid and safe introduction