In his latest Autumn Statement, the Chancellor of the Exchequer, Jeremy Hunt announced a variety of measures that will impact the financial services industry.
A widespread pension reform has been announced that promises to provide better outcomes for savers, to drive more consolidated pensions markets and to enable pension funds to invest in more diverse portfolios. To drive market consolidation, the government has welcomed the current trend of defined contribution pension fund consolidation and expects to see a market in which the vast majority of savers belong to schemes of £30 billion or larger by 2030.
Finally, to increase portfolio diversification, the Chancellor set out policies to reduce the authorised surplus payments charge from 35% to 25% from 6 April 2024.
International Taxation – OECD Pillar 2
The UK government pledged its commitment to the implementation of the OECD Pillar 2 through its implementation of the multinational top-up tax, domestic minimum tax, and the undertaxed profits rule. These are projected to generate an additional £12.7bn domestically over the next six years.
The UK government has announced that ‘full expensing’, which was originally proposed to finish Spring 2026, is to be made permanent and accordingly allow UK companies to claim 100% first-year capital allowances on qualifying plant and machinery investments. This policy is said to enhance business certainty and support long-term investment decisions, further enforcing the government’s ‘growth statement’.
HM Treasury and HMRC will be launching a technical consultation on wider changes to simplify the current capital allowances legislation. Although these changes are not yet specified, the draft legislation is planned for Summer 2024. Leasing assets are still set to remain excluded from full expensing.
Stamp Duty and Stamp Duty Reserve Tax
The government also announced its planned expansion of the ‘growth market exemption’ – a relief from stamp duty and stamp duty reserve tax, to encompass small and innovative growth markets. Additionally, the threshold for the market capitalisation condition within the exemption rose from £170m to £450m. The changes are included in the Autumn Finance Bill 2023 and were implemented on 1 January 2024.
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