The Chancellor announced the following measures on Corporation Tax in his 2023 Autumn Statement.
Call for evidence on the visual effects industry
From April 2025, the government intends to increase the Audio-Visual Expenditure Credit. A call for evidence seeks views on how to design this extended credit. Evidence is requested on:
- Recent trends in the visual effects industry
- The effect of the current reliefs on investment decisions.
- The consultation closes on 10 January 2023.
Reform of film, TV and video games tax reliefs to expenditure credits
From 1 January 2024, the government have confirmed that the Audio-Visual Expenditure Credit will replace the following:
- Film Tax Relief.
- High-End TV Tax Relief.
- Animation Tax Relief.
- Children’s TV Tax Relief.
The credit can be claimed voluntarily but all new productions must claim under the new scheme from 1 April 2025, and all productions from 1 April 2027. The new credits will be:
- Film, high-end TV and video games: 34%.
- Animated film and TV and children’s TV: 39%.
See Creative Industries: Audio Visual Expenditure Credits
Extension of the Enterprise Investment Scheme and Venture Capital Trusts scheme
The Enterprise Investment Scheme and Venture Capital Trust scheme will be extended for another 10 years longer than currently planned.
- Both schemes currently have sunset clauses ending the schemes in April 2025.
- The announcement extends the schemes until April 2035.
See Enterprise Investment Scheme: subscriber guide
Research & Development (R&D) tax relief reforms
From 1 April 2024, the government has confirmed the following reforms:
- The existing Research & Development Expenditure Credit (RDEC) and SME schemes will be merged from 1 April 2024.
- The rate offered under the merged scheme will be implemented at the current RDEC rate of 20%.
- The notional tax rate applied to loss-makers in the merged scheme will be the small profit rate of 19%, rather than the 25% main rate currently set in the RDEC.
- The merged scheme will operate like the existing RDEC via a notional tax credit.
- Where the credit is more than the tax liability, the Corporation Tax rate used in Step 2 of the calculation will be 19% and not 25%, to provide greater relief.
- The merged scheme will bring changes to claims for sub-contracted R&D. The ability to claim will now rest with the company whose decision it is to undertake the R&D. This stops sub-contractors from claiming relief for performing work for another company unless that work is for non-UK corporation taxpayers.
- The rules will also apply to R&D-intensive SMEs, outside of the new merged scheme.
- Enhanced support for R&D-intensive SMEs:
- For expenditure incurred from 1 April 2023: Finance Bill 2023 will implement the enhanced support for R&D intensive SMEs, providing a higher rate of payable tax credit for eligible SMEs.
- Loss-making companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition for R&D intensity.
- From 1 April 2024: The intensity threshold required to qualify will be reduced from 40% to 30% from 1 April 2024. A one-year grace period will be introduced allowing companies dipping under the 30% threshold to continue to qualify.
- Restricting R&D nominations and assignments
- From 22 November 2023 and 1 April 2024: Autumn Finance Bill 2023 will remove the use of nominations for R&D tax credit payments, subject to limited exceptions, for all claims made on or after 1 April 2024.
- This will stop payments being made to third parties, with payments going directly to claimants.
- Legislation will also prevent any new assignment (whether equitable or statutory) of R&D tax credits in relation to assignments made on or after 22 November 2023.
- From 22 November 2023 and 1 April 2024: Autumn Finance Bill 2023 will remove the use of nominations for R&D tax credit payments, subject to limited exceptions, for all claims made on or after 1 April 2024.
See R &D Tax Relief
Tax exemption for corporate recipients of compensation payments made under the Post Office compensation schemes
From 1 January 2024, measures will ensure that payments made under the Post Office compensation schemes are taxable upon the ultimate recipient in the same way as if a payment had been made directly to an individual:
- The Group Litigation Order Scheme: will be exempt from Corporation Tax and Income Tax.
- The Horizon Shortfall Scheme: currently exempt from Corporation Tax but onward payments to individuals are taxable if the original source of the income was taxable. Top-up payments are exempt from both taxes.
- The Suspension Remuneration Review: currently exempt at a corporate level but individual onward payments are taxable if the underlying source is taxable, where paid before 1 January 2024. After this date, payments will be exempt for both taxes. Top up payments are also exempt for both.
- Post Office Process Review Scheme: all payments are exempt from Corporation Tax and onward payments are not subject to Income Tax.
See Post Office Horizon Compensation Payments
Annual Tax on Enveloped Dwellings (ATED)
From 1 April 2024:
- ATED annual charges will rise by 6.7% from 1 April 2024 in line with the September 2023 Consumer Price Index.
See ATED
Real Estate Investment Trusts (REITs)
From the date of Royal Assent to Autumn Finance Bill 2023:
- Autumn Finance Bill 2023 will make amendments to the rules for REITs to enhance the competitiveness of the regime.
Useful links
Autumn Statement 2023: At a glance
The Chancellor, Jeremy Hunt, presented his Autumn Statement 2023 speech on Wednesday 22 November. This is our 'At a glance' summary of the key tax announcements and measures.
External links
Call for evidence: Call for evidence on the visual effects industry
Policy paper: Reform of audio-visual creative tax reliefs
Policy paper: Extension of the Enterprise Investment Scheme and Venture Capital Trust Scheme
Policy paper: Research & Development (R&D) tax relief reforms
Policy paper: Technical note on changes to research and development tax reliefs at Autumn Statement 2023
Policy paper: Clarifications of the rules for cultural tax reliefs
