Spring Budget 2024

At a pivotal time in the political landscape, the Chancellor revealed his Spring Budget and continued his theme of long-term growth. Amidst jeering and numerous interventions from the deputy speaker, his plans presented more than just tinkering around the edges.

Of course, there were the rate change give-aways. Perhaps, unexpectedly in CGT on residential property and, expectedly but importantly, NI for employees and the self-employed.  No reduction on the NI cost of employment for employers though, so firmly a budget aimed at the voter.

Any move to changing the High Income Child Benefit Charge will generally be welcome even if it is only removing the unfairness.  The ultimate abolition though will require HMRC to evaluate family income despite independent taxation being the core of our income tax system.  One might ask why we don’t simply means-test the benefit in the first place rather than clutter up the tax system with a recovery process.

However, the biggest change was in the reform of the tax regime for non-doms.  This was possibly going to be a Labour party flagship election promise that has been comprehensively ‘borrowed’ by the Chancellor.  The non-dom regime has been a core feature of the UK tax system for a long time albeit one that has come under significant scrutiny more recently.  However, it is going. It will be replaced by a more modern system being a tax holiday on offshore income and gains for the first 4 years of a person coming to the UK.  Portugal latterly, and now Italy, amongst others have similar tax ‘holidays’ to attract the wealthy and internationally mobile to their shores. 

We hope you find the commentary by our experts interesting and that you can attend one of our briefing sessions in the next few days but if not please do not hesitate to get in touch if you want to know more.  

Catch up with our webinar where our team of experts unpacked the announcements and what they mean for you.

Corporate Taxes

Capital allowances

What was announced?

In the 2023 Autumn Statement, full expensing and the 50% first-year allowance for special rate assets were made permanent. However, expenditure on plant or machinery for leasing was excluded from these allowances.

It was announced today that draft legislation will shortly be released for technical consultation to help the government consider any potential extension to include plant and machinery for leasing, but it is subject to future decision “when fiscal conditions allow”.

What does this mean?

Plant and machinery for leasing was already identified as an excluded area, for full expensing and it had been widely anticipated that some amendment would be made to accommodate this type of expenditure. This announcement shows that the government and businesses can work together to find commercial solutions that do not expose the exchequer to tax avoidance. Of course, the timing and extent of how this will be done is still to be seen.

- Neil Strong

Innovation and research and development (R&D)

What was announced?

The most significant tax incentives for innovative businesses in the UK, R&D Tax Credit and Patent Box regimes, went unmentioned by the Chancellor. This was not a surprise given the announcements that have been made to date. The major previous announcement was the merger of the existing SME R&D and RDEC schemes, though its commencement date was recently confirmed as taking effect from 1 April 2024. However, there is now a raft of associated additional tax compliance requirements which have been or will be introduced. These include the requirements to provide a completed “Additional Information Form” to support an R&D claim and to “pre-notify” an intention to make an R&D claim within six months of the end of a company’s accounting period.

The Budget documents announced the establishment of an expert advisory panel by HMRC to provide guidance and “clarity” to support HMRC R&D guidance to taxpayers.

What does this mean?

The new merged R&D regime is largely based on the existing RDEC regime but with changes, including removing most relief for R&D expenditure incurred outside the UK, and potentially applying greater clarity around the treatment of sub-contracted R&D expenditure. The upside is that this will provide some greater certainty and, hopefully, a period of stability in the UK R&D tax regime that will be of value to UK businesses and their advisors.

This should be weighed against the continuing resistance of HMRC officers to engage properly with businesses and the emphasis of HMRC on dealing with perceived fraud rather than helping those businesses who are entitled to R&D and Patent Box tax reliefs to obtain what they are due and to support investment in innovation in the UK.

The Expert Advisory Panel is an unexpected announcement. This panel may be helpful if it can support clearer guidance from HMRC on what constitutes qualifying R&D for the scheme. However, we await details of the composition of the panel and its modus operandi, before passing judgement on its likely impact.

Gary Collins

Share incentives

What was announced?

As broadly expected, there were no specific announcements in relation to share incentives in this Budget, however, changes to NIC can have a (positive) effect on the tax implications for share incentives.

What does this mean?

Generally, the tax efficiencies associated with share incentives are designed around holding a capital asset (securities) that grows in value and is taxable to capital gains tax on disposal rather than income tax and national insurance. However, some incentives are still wholly or partially chargeable to income tax and national insurance, therefore we welcome the lowering of the class 1 employee national insurance full rate from 10% to 8%. This could result in a small reduction in the initial cost of acquiring shares for a basic rate taxpayer from 30% to 28% – these shares might then grow in value and be taxed to 10% or 20% capital gains tax, still giving a great incentive.

That being said, the more tax efficient position is still to acquire shares under a tax-advantaged share option plan such as enterprise management incentive (EMI) or company share option plan (CSOP) – both have seen helpful amendments in the 2023 budget but no further changes today - perhaps solidifying the government’s support for them.

Amy Reynolds

Private client

Property taxation 

What was announced?

In relation to property income, the Chancellor announced that the Furnished Holiday Lettings (FHL) regime would be abolished from 6 April 2025. 

Currently, landlords who let holiday homes on a short-term basis and meet the FHL rules qualify for a number of tax benefits that are not available to other landlords.  These include:

  • Full mortgage interest relief deduction from rental profits;
  • Capital allowances on the cost of furnishing the property;
  • The ability to make pension contributions based on rental profits; and
  • Various Capital Gains Tax reliefs on the sale of property including Business Asset Disposal Relief, Roll-over Relief and Hold-over Relief.

The Chancellor noted that these reliefs are distorting the rental market by incentivising landlords to offer short-term holiday lets and therefore reducing the availability of long-term rentals in the community.

Perhaps recognising the high tax rate now suffered by landlords, the Chancellor also announced a cut to the higher rate of Capital Gains Tax (CGT) that applies on the sale of residential property from 28% to 24% with effect from 6 April 2024.

What does this mean?

In a further blow to the property market, landlords who previously qualified for the FHL regime will no longer be able to benefit from these reliefs and will be taxed on the same basis as other landlords from April 2025.

The reduction in the CGT rate will be of limited comfort to long suffering landlords but it may be a welcome tax reduction for those looking to offload rental properties or exit the market.  

Sean Cockburn

Property taxation: stamp duty land tax

What was announced?

It was announced today that Multiple Dwellings Relief (MDR) would be abolished for transactions which complete, or which are substantially performed, on or after 1 June 2024 unless contracts were exchanged on or before 6 March 2024 and there is no variation of the contract after that date.

What does this mean?

This will increase the SDLT payable where two or more dwellings are purchased together.  It would appear that the abolition is aimed at the perceived avoidance by individuals buying expensive residences with self-contained annexes that are essentially used as a single dwelling as the external research commissioned by HMRC showed that 51% of claimants were using the property purchased for personal purposes.

Whilst six or more properties purchased together in a single transaction are treated as non-residential rates of SDLT (top rate 5% compared to 15% for dwellings) if the average price per dwelling was low enough it was still advantageous for such purchasers to claim MDR so even the large players may be adversely affected.

It remains to be seen whether the effect of the abolition on the business sector will have an adverse impact on the rental sector through either a reduction in the number of properties available for rent or an increase in rents.

The abolition only affects purchases of dwellings in England or Northern Ireland and it remains to be seen whether the devolved administrations in Scotland and Wales will follow suit and amend the land and buildings transaction tax and land transaction tax legislation to also abolish MDR.

- Sean Cockburn


What was announced?

For savers, the Chancellor announced the introduction of a new £5,000 ‘UK ISA’. This new account is in addition to the existing ISA allowance to provide a route to invest in UK focussed assets.

What does this mean?

A consultation on the UK ISA has been launched and will run until 6 June 2024, after which we will have further details including the date of commencement.

Sean Cockburn

Non-Domiciled individuals

What was announced?

The tax status of non-domiciled individuals has attracted much debate in recent months and so it was no surprise that the Chancellor announced he is making significant changes to the regime.  Under the current rules, an individual that is resident in the UK, but not domiciled here, can limit their exposure to UK taxation for up to 15 years. 

Supporters of the regime argue this is necessary to attract wealthy individuals to the UK whilst critics point out that their funds must continue to be held outside of the UK to benefit from these rules.

We learned that a new ‘modern, fairer and simpler’ regime based on residency would be introduced in April 2025. New arrivals to the UK will be exempt from paying UK tax on their overseas income and gains for 4 years, after which they will be subject to UK tax on their worldwide income and gains.

What does this mean?

The new regime will make the UK an even more attractive place to come and live... but only for 4 years.  After this time, there will no longer be a tax benefit for non-domiciled individuals and, given the high rates of UK taxation, this could be very expensive.

For non-domiciled individuals living in the UK who have already benefitted from their non-dom status, the position becomes very complicated.  A Temporary Repatriation Facility will be available for the 2025/26 and 2026/27 tax years that will allow the remittance of foreign income and gains at reduced rates.  Any unremitted income or gains after this date will then be subject to the usual rates on remittance.

An individual’s domicile status also determines their exposure to UK inheritance tax and the Budget technical notes state the intention to move this to a similar residence-based test from April 2025, subject to consultation.  Such a change would open up an individual’s worldwide assets to an inheritance tax charge after only 4 years, a massive shift from the current 15 year position.

Sean Cockburn

Higher Income Child Benefit Charge (HICBC)

What was announced?

Child Benefit is a monthly payment, worth up to £1,331 annually for the first child and £881 for each subsequent child, for anyone with parental responsibilities for children under the age of 16 (or up to 20 in full-time education).

The current Child Benefit system means that a couple could earn a combined income of £98,000 a year (£49,000 each) and get full child benefit, whilst a family with a single earner earning £60,000 a year would need to either stop claiming or pay it back via self-assessment  – T.

However, from 6 April 2024, the Chancellor has announced that:

  • The upper earnings threshold – the point at which you start paying some of the benefit back – will rise from £50,000 to £60,000.
  • In addition, the earnings limit at which you stop being entitled to Child Benefit will increase from £60,000 to £80,000.

Therefore, the taper will be extended and the restriction on child benefit will apply when earning more than £60,000.

The rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earned above the threshold to 1% for every £200, as the taper restriction moves to £80,000 giving a £20,000 rather than £10,000 gap. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.

Overall, the Government estimates that 170,000 families will be taken out of paying the tax charge.

Alongside this, the Chancellor has confirmed that a consultation will launch in "due course", which will examine whether to change child benefit eligibility to being based on household income, rather than on individual income, by April 2026.

What does this mean?

It means the government has recognised that the benefit withdrawal mechanism has not been updated for some time (over 10 years) and was in need of update and review. It will help families with individuals earning below £60,000 as they will now be fully entitled to child benefit.  There remain complications for those with income above this level, as the taper is now over a larger amount of income (£20,000 as opposed to £10,000).   The repayment mechanism will still require two parent families to be aware of each other’s financial affairs.  As a result, there may continue to be tax cases brought before the Courts over the administration of the withdrawal of the child benefit.

The consultation into making child benefit based on “household” income does appear a little radical (how will household be defined) and is one that will need very careful consideration, especially as this is already far too complicated and begs the question as to whether it would have been better to abolish the withdrawal of the benefit altogether and recover the cost in a simpler manner. 

Ian Goodwin

Employment taxes

National Minimum Wage (NMW)

What was announced?

There was no further NMW announcement during the Budget.  This was in line with expectations. Therefore, the changes to NMW coming into force from 1 April will continue as planned, with employers being required to pay all those aged 21 or over at least £11.44 per hour.

Additionally, we recently saw the publication of over 500 businesses being named as underpaying workers less than the NMW due. Many of these under payments come from technicalities connected to working time, pay types, deductions and worker type.

HMRC are certainly active with compliance and enforcement activity connected to NMW, with them holding webinars and also targeting employers on a regional basis, with Liverpool the most recent location chosen to be assessed in further detail.

What does this mean?

Increasing NMW rates and further NIC cuts should help boost net pay income for those impacted. However, employers and workers will need to be very mindful of the interaction with salary sacrifice arrangements, given that pressures on pay may mean employers cannot pay much more than NMW, leaving more employees unable to participate in salary sacrifice due to NMW regulations.

This could therefore reduce the net pay increase the NIC cut and NMW increase will bring from April 2024, particularly where the individual may have been participating in Pension or Electric Car Salary Sacrifice.

Separately, with increased NMW rates, more and more salaried workers are being brought into the remit of potentially earning less than NMW. This is a major area of focus, especially as working time records for monthly paid salaried workers may not be well kept, leaving more challenges around this area of compliance (particularly during a Leap Year!). 

Ian Goodwin

National Insurance Contributions (NIC)

What was announced?

Today’s headline announcement was a 2% reduction in the main rate of employee NICs. Accordingly, employees will now pay NIC at 8% on annual earnings between £12,570 and £50,270, with 2% applying above that level, as opposed to the 10% that was introduced in January 2024.

This change is expected to benefit around 27 million people and is effective from 6 April 2024 so employees will see an almost immediate benefit, albeit there is little time for employers to get their payroll in order, especially when considering other updates for NMW compliance etc that are also required.

Unfortunately, there is no cut to NIC for employers, leaving them with no easements to increasing cost pressures ranging from NMW, pension contributions and the need to remain attractive to retain and recruit the best talent.

For self-employed individuals, following up on the Autumn Statement announcement of the abolition of class 2 NICs, the Chancellor announced a further 2 percentage point reduction in the Class 4 NIC rate paid on profits between £12,570 and £50,270, reducing this from 8% to 6%. This will provide a further benefit of up to £754 per year.  Again, this will be welcomed, although unlikely to be met with the pizzazz that an income tax cut would have potentially been.

This measure will also help Scottish and Welsh taxpayers given that NIC is not devolved like income tax is. Therefore, this announcement benefits all employed and self-employed workers in the UK, not just in certain regions.

What does this mean?

In short, compared to if the Government had not announced anything, the employee and self-employed individuals are better off than they would otherwise have been. Therefore, they have more net pay.

The biggest net pay increase will be seen by those earning £50,270 or more, but someone on NMW would also see an annual increase of c. £198 too.

Employers will need to ensure payroll systems are ready for immediate updates and also update communications setting out any NIC savings generated from being in salary sacrifice arrangements.

The lack of an announcement on any employer NIC reduction does highlight the government’s focus on the individual rather than the business itself. One area that might have been missed here is whether employers can afford to pay employees given wider business pressures – highlighted by high profile businesses closing stores and making redundancies.  If there are no jobs available, the NIC cut makes no difference.

Self-employed individuals may need to re-assess how this interacts with their overall income plans, particularly if they were looking to incorporate in the near future – reducing NICs even further also reduces the financial benefit of incorporation.

Further, those who are paid by way of dividends and pensioners are not going to benefit from this announcement. 

Ian Goodwin

VAT and Indirect taxes

VAT registration thresholds

What was announced?

The VAT registration threshold will increase from 1 April 2024 from £85,000 to £90,000. The threshold for determining whether a person may apply for deregistration will be increased from £83,000 to £88,000.

What does this mean?

This is a long awaited change to address the effects of inflation as the threshold has not increased since 2017. Some smaller businesses that would have otherwise been required to register, will no longer be required to account for VAT on supplies if they remain under the new threshold. Furthermore, remaining below the new threshold will reduce the administrative burden and costs which come with having to register for VAT and submit VAT returns.

Linda Adelson and Juliet Bailey

VAT Terminal Markets and Carbon Credits

What was announced?

Reform of the Terminal Markets Order (TMO) will include bringing trades in carbon credits within the scope of that order.

What does this mean?

Consultation on reform of the TMO to modernise its provisions took place in 2023. It has now been announced that trades in carbon credits will be brought within the scope of the TMO, thus widening the applicable zero-rating provisions.

Linda Adelson and Juliet Bailey

VAT DIY housebuilders scheme

What was announced?

Legislation will be introduced, coming into force on the date of Royal Assent to Spring Finance Bill 2024, to give HMRC more powers to request further evidential documentation in respect of DIY house builder’s claims.

What does this mean?

The new legislation will assist HMRC in completing compliance checks and ensuring claims are valid, but DIY builders will need to ensure that they have all their documentation in place, ready to send to HMRC on request, otherwise, their refund claim could be rejected or clawed back.

Linda Adelson and Juliet Bailey

Duty and other rates

What was announced?

  • Alcohol duty to be frozen until 1 February 2025
  • Fuel duty to remain at the current rate for a further 12 months (until March 2025).
  • Increases in air passenger duty and landfill tax rates.

What does this mean?

For alcohol duty, this extends the six month freeze previously announced and is aimed to support businesses in the hospitality sector and reduce the cost of living for consumers. For fuel duty, the temporary 5p cut in fuel duty rates will be extended until March 2025 and planned inflationary increases will which should be cancelled and save costs for drivers.

Linda Adelson and Juliet Bailey

Duty on vapes

What was announced?

A new duty on vaping products will be introduced from 1 October 2026 and registrations for the duty will be opening from 1 April 2026. There will be a one-off tobacco duty increase.

What does this mean?

Duty will be applied to liquids for use in e-cigarettes and vaping devices with rates of £1 per 10ml for nicotine-free liquids, £2 per 10ml on liquids that contain nicotine at concentrations between 0.1-10.9mg per ml and £3.00 per 10ml on liquids that contain nicotine at concentrations 11mg or more per ml.

The one-off tobacco duty increase of £2 per 100 cigarettes or 50 grams of tobacco will apply from 1 October 2026.

Linda Adelson and Juliet Bailey

Global mobility


What was announced

No real announcement except the focus is getting more of those already in the UK and not working back into the workforce, and that migration is not the answer to filling the 900,000 vacancies in the UK.

The big change is the abolition of the non-dom regime and its replacement by a short-term exemption for people coming to the UK.  The current system gives tax exemptions for those who are residents but non-domiciled in the UK (roughly those who are living here for the medium or long term but not forever). Those exemptions were only for investments made abroad and were lost if the money was brought into the UK, so it discouraged wealthy people from investing in the UK. This, coupled with the fact that there is no specific immigration route for investors since the Tier route was closed, is not really what the UK needs, particularly in a recession.

The new tax break gives a tax exemption for non-UK income and gains, even if the money is brought into the UK, but only for the first four years of residence. Therefore, it is more generous initially, and for those who only come to work in the UK for a short time but could mean higher tax bills for those who stay here for more than four years. This will discourage top talent from coming to the UK and settling here, since they lose eligibility for the tax exemption after four years and will have to report their non-UK income in two countries, dealing with all the complexity of double tax relief.

This will apply from April 2025. For those who are already in the UK and benefiting from the non-dom tax breaks, there will be transitional reliefs for two years, but they need to urgently re-examine their tax affairs over the next 13 months, and if they decide to stay in the UK may need to rearrange their non-UK investments.

It seems unfair that while most UK residents pay tax on their incomes, whether made in the UK or abroad, non-doms get a special deal. That unfairness is made clearer by the fact many non-doms using the tax break are already very well-off. However, if the new rules discourage non-UK investors and executives from staying here long term, it could damage the UK economy.

Sue Kukadia


Public and social

What was announced?

The chancellor’s opening statement mentioned this budget was to support better public services, going on to link a strong economy and strong public services and maintaining a 1% per year increase in spending in real terms retained, but to ‘spend it better.’ 

Whilst a variety of capital investment schemes were announced, such as the extension of Town Deals funding, investments to deliver desperately needed new homes, and £105m towards Special Education Needs & Disabilities (SEND) schools, front and centre was the focus on public sector productivity, with the Chancellor claiming that a 5% increase in productivity is equivalent to £20bn in additional funding and explaining that the next spending review will prioritise proposals that deliver cash releasing savings. 

The Government’s Public Sector Productivity Plan was illustrated by the announcement of £3.4bn investment in NHS IT systems, as set out in the NHS long-term plan, which is estimated to generate £35bn savings. 

What does this mean for the sector?

Public services have been struggling financially for some time, and understandably, many local authorities have been focusing on short-term measures to plug the finances, especially as there are few efficiencies left to be found.

Public Sector IT and data infrastructure is in dire need of significant investment, and perhaps today’s announcement will help focus investment on IT and digitalisation.

But transformation takes time and local authorities are facing significant issues in the here and now. Just earlier this month, we saw 19 of the most challenged local authorities permitted to fund £1.5bn of day-to-day spending through capital flexibilities which will be funded through borrowing or selling assets.

With the announcement of a Public Sector Productivity Plan, local authorities must focus on transformation with demonstrable returns on investment, instead of short-term efficiency gains and prioritise digital skills and capabilities. However, even if available funds are fully invested in transformation, the sector will need to face some challenging questions:

  • Will this investment resolve the underlying financial challenges facing the sector?
  • How can we calculate and demonstrate the link between investment and savings? And how will it validate these have actually been achieved?
  • In the midst of a recruitment and retention crisis, who will deliver the transformation and who will embed the change needed?

- Peter Cudlip, Suresh Patel and Mark Surridge

Healthcare and life sciences

What was announced?

Most of the changes for the Healthcare and Life Sciences sector had been preannounced in the Autumn Statement. Still, Astra Zeneca was given extra profile in the Spring Budget speech with the announcement of their £650m investment in new vaccine facilities in Liverpool and the expansion of their headquarters in Cambridge highlighting the importance of this sector to the UK economy.

Confirmation was given on when companies can apply for a share of the £520m of funding for Life Sciences Manufacturing (announced in the Autumn Statement) with large scale investments open for expressions of interest in the summer of this year while SMEs will have to wait until the autumn.  Likewise, it was reconfirmed that Lab technicians would form part of the £50m Apprenticeship growth sector two-year pilot, which could be worth up to £3k per apprentice. The Budget statement also announced £45m of additional funding for charity research into cancer, dementia and epilepsy.

Changes to the non-domiciled regime may have an impact on globally mobile senior executives but it is too early to state what the behavioural impact of this legislation will be. The preannounced changes to the R&D regimes obviously have a major impact in this sector, particularly at the SME end. Although, HMRC have announced that they will be setting up an R&D Expert Advisory panel to help the administration of R&D for tax reliefs and ensure guidance provides clarity and is up to date.

Tucked away, in one of the many Budget documents released, was an interesting consultation document on the Private Intermittent Securities and Capital Exchange System (“PISCES”) designed to allow private companies to access capital markets on an intermittent basis allowing owners of fast-growing to realise gains or rationalise their capital base in a controlled environment.  Having a secondary market may help entrepreneurs and their employees realise any gains they have made without having to wait for an exit event. HM Treasury are consulting on how best to shape this going forward.

What does this mean for the sector?

The Government clearly sees this sector as fundamental to the future growth of the UK and continues to champion the initiatives they make.

- Ludovic Black


What was announced?

The consumer sector saw no big announcements or changes to business rates, though there were a number of consultations and the prospect of full expensing for leased assets when fiscal conditions permit. The Government is considering the OBRs review of the costings for the removal of tax-free shopping for international visitors and will consider further data and representations, but no changes to this policy were announced.

What does this mean for the sector?

The Consumer sector has seen falling sales across the board, not least from its international customer base following the removal of tax-free shopping in 2021. It was hoped this decision would be reversed to help stimulate the sector, but the government announced more deliberation and consultations before taking further action and so no clarity was provided by this Budget.

There were no new announcements either for business rates, a long-debated topic amongst high street retailers seeking parity with online retailers.  However, there will be some relief in that the standard business rates multiplier increase scheduled for April 2024 will remain based on the Consumer Price Index of September 2023 and has not been updated to April 2024, which would have increased the cost to businesses further. The small business multiplier is frozen.

Many in the Consumer sector will welcome the planned future extension of full expensing relief to leased assets, which it is hoped will increase up-front tax reliefs available for the use of certain capital assets.

- Claire Cowen


What was announced?

In a wide-ranging Spring Budget, Energy took a back seat on the floor of the House of Commons. The Chancellor reiterated the Government’s position that the future of clean energy in the UK will be spearheaded by nuclear power with a desire for 25% of all energy to be provided by nuclear. The Government intends to focus on large scale nuclear projects, such as Hinkley Point C, as well as the development of small modular reactors, which will begin a competitive tendering process later in the summer. The Government has also begun to procure sites for potential future nuclear sites in anticipation of potential expansion.  

Separately, £120m of additional investment for the Green Industry Growth Accelerator to develop supply chains for offshore wind as well as carbon capture and storage, was announced. The Chancellor’s Spring Budget highlighted key aspects for unlocking growth in the clean energy sector, referring back to planning reforms announced during the Autumn Statement. These reforms aim to accelerate access to the National Grid, and more detailed plans are expected to be announced in the summer.

Specific tax measures were limited for the Energy sector, with some minor amendments to the Energy Profits Levy, potentially extending the scheme for 12 months, but also legislating to abolish the measures if energy prices fall below a certain level.

What does this mean for the sector?

The announcements today are in line with the Government’s recent track record in relation to the Energy sector. The progress on the grid connection reforms will be welcome news for developers and investors looking at new opportunities, but the key will be in the details of the reforms published in the summer. Opportunities remain to make green energy more attractive for specific investment which the Government has not looked to pursue at this time. 

- Greig Simms

Financial services 

Full expensing

What was announced?

As announced in the Autumn Statement, full expensing was made permanent.

The Government will shortly publish draft legislation for full expensing to apply to leased assets. This change will come in “as soon as it’s affordable”.

What does this mean for the sector?

The full expensing legislation means that businesses can get 100% tax relief for new plant or machinery assets in the year of expenditure. Extension of the scheme to include leased assets will make lease finance more attractive and should stimulate investment in new plant or machinery assets. By extending the scheme, qualifying assets used in all business sectors can benefit from 100% tax relief while also benefiting from the finance which leasing provides.

The details of the draft legislation remain to be seen, particularly how and when it will apply. 

Consultation on Cryptoasset Reporting Framework (“CARF”) and Amendments to the Common Reporting Standard (“CRS”)

What was announced?

Following the International Joint Statement published on 10 November 2023, the Government has now announced a consultation on the CARF and on amendments to the CRS proposed by the OECD. The consultation runs until 29 May 2024. In the UK, the aim of the CARF will be to oblige UK cryptoasset service providers to report to HMRC information about non-resident customers, so that HMRC can pass this information to tax authorities in the jurisdiction where the customer resides.

The aim of the CRS amendments will be to bring digital financial products within the scope of the CRS and to increase the number of data fields which financial institutions will be obliged to report. There are also proposals to classify certain non-profit investment entities as ‘Non-Reporting Financial Institutions’ and to create a new category of excluded accounts for ‘capital contributions’ on incorporation of a new company.

The aim is for the amendments to take effect for the reporting year 2026.

What does this mean for the sector?

The CARF will place considerable reporting obligations on the crypto sector, similar to those already placed on financial institutions in relation to the CRS and FATCA. In the CRS amendments, the broadening of CRS asset classes to include digital assets will increase the burden of CRS reporting by financial institutions.

The consultations are an opportunity for financial institutions, cryptoasset service providers and their advisers to raise concerns. 

Ian Thomson 

Automotive and manufacturing

What was announced?

  • Additional £270m investment on advanced manufacturing, including for innovative zero emission vehicles and clean air technologies.
  • Full expensing for leased assets, for which draft legislation will follow, effective when fiscal conditions allow.
  • Temporary fuel duty 5p reduction extended for another 5 months.
  • Carbon tariff on imports of iron, steel, aluminium, ceramics and cement from 2027.

What does it mean for the sector?

Following the publication of its Advanced Manufacturing Plan in November 2023, the next steps regarding the £4.5 billion funding package to unlock investment in strategic manufacturing sectors (automotive, aerospace, life sciences and clean energy) were announced. £273 million of combined government and industry investment will be made available for cutting edge R&D projects, £70 million of which is ear marked for the automotive industry, illustrating the government’s commitment to the plan.

However, the budget did not go so far as introducing any fresh incentives to boost the adoption of electric vehicles, which may come as a disappointment to many.

The full expensing extension announced today provides much-desired support for leased plant and machinery assets. Industrial manufacturing, construction, and automotive industries in particular will reap these benefits directly with construction equipment and commercial vehicle manufacturers likely among the biggest winners. However, as its introduction was qualified with “as soon as it is affordable”, it remains to be seen how and when this benefit will be implemented.

Many businesses have absorbed the impact of increased import costs due to Brexit and are grappling with cost escalations through present economic conditions and compliance requirements. The introduction of carbon tariffs will only exacerbate the issue and may, over time, lead to further consolidation upstream and downstream in the manufacturing and automotive sectors. To sustain competitiveness and sustainability in their supply chain operations amidst dynamic market conditions, businesses must implement forward planning and carbon accounting mechanisms to mitigate risks and ensure compliance with EU regulations. Taking these steps will help businesses remain ahead of the curve and maintain a robust and healthy supply chain over the long term.

The extension of the 5p per litre cut in fuel duty might be expected to save the average car driver but it is unclear how this might impact the wider automotive industry. However, despite the freeze, drivers are still facing rising petrol prices.

In summary, while the Budget assisted car users by maintaining fuel duty freezes, it missed an opportunity to provide stronger support for electric vehicle sales and stimulate that market albeit the additional £730m specifically for automotive R&D projects is helpful.

- Vesko Petkov and Lucy Redding