Autumn Statement 2022: What does it mean for large companies?

For large and multi-national corporates, the key points to note are as follows:

• It was no surprise that the already enacted increase in corporate tax to 25% will go ahead from 1 April 2023, with a corresponding increase in diverted profits tax to 31%.
• The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20% for expenditure incurred on or after 1 April 2023, with a consultation on simplifying tax reliefs for R&D with a single scheme for all. Given that the SME relief was reduced and the continued focus by HMRC on SME tax credit fraud, it seems a fair assumption that the proposed single scheme would look more like RDEC.
• In a change to the draft legislation issued in July 2022, the proposed Pillar 2 global minimum tax rate will apply to all groups with consolidated turnover exceeding €750m, including wholly domestic groups, where the effective tax rate is below 15%. These rules will apply for accounting periods commencing on or after 31 December 2023, although the backstop Undertaxed Profits Rule will be implemented with later effect, for accounting periods beginning on or after 31 December 2024.
• Large multinational businesses operating in the UK will be required to keep and retain transfer pricing documentation from 1 April 2023, following a prescribed and standardised format, as set out in the OECD’s Transfer Pricing Guidelines (Master File and Local File). HMRC will continue to consult on a Summary Audit Trail.
• There were no significant VAT announcements for businesses already above the registration threshold; however, the removal of import tariffs for 100+ goods for 2 years will impact a wide variety of goods ranging from fruit juice to diesel engines. The intention of the change is to make manufacturing in the UK more competitive. The list of suspensions are expected to take effect in January 2023.
• For groups with a substantial employee base, changes to the National Living and Minimum Wage rates may particularly affect those with a younger workforce, such a retailers and groups offering apprenticeships. The previously announced reduction in NIC rates from 6 November 2022 will go ahead, with employer NIC thresholds frozen until 2028.
• Despite increases to the electric company car benefit in kind to 3% from April 2025 (rising to 5% by 2027/2028), the rates remain attractive for groups looking to reward and retain staff as efficiently and effectively as possible.
• No Online Sales Tax will be introduced, contrary to an original proposal intended to rebalance the taxation of the retail sector between online and in-store retail. This is in response to concerns raised during the public consultation about its potential complexity and the risk of creating unfair outcomes between different business models. A response to the consultation will be published shortly.
• There are a number of changes to business rates, including updating bills to reflect changes in property values, freezing the multiplier and specific support for eligible retail, hospitality, and leisure businesses, which will be extended and increased from 50% to 75% (up to £110,000 per business) in 2023-24.
• Specific sectors continue to attract a more focussed approach, including a reduction in the Bank Corporation Tax Surcharge to 3% and levy increases in the Energy sector.

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