The Autumn Statement of 22 November 2023 was the second formal fiscal event of Jeremy Hunt's chancellorship and contained the first genuine net tax cuts since the Mini-Budget. The headline measures were a two percentage point cut in the main rate of employee National Insurance from 12% to 10% from 6 January 2024, the announcement that full expensing would become permanent, and the confirmation that the SME and RDEC R&D schemes would merge from accounting periods beginning on or after 1 April 2024.
For SMEs, the package mattered as much for what it did not change as for what it did. Income tax rates and bands stayed frozen, the personal allowance freeze to 2028 was unchanged, and the additional rate threshold remained at £125,140.
The NIC cut and its mid-year start
The cut in the main rate of Class 1 employee National Insurance from 12% to 10% took effect from 6 January 2024 — an unusual mid-tax-year implementation that required employers and payroll software providers to update before the first January pay run. Our payroll and bookkeeping team co-ordinated mid-period updates for the clients we run payroll for, and we issued written guidance to clients running their own payroll.
For Class 4 self-employed contributions, the main rate was cut from 9% to 8% from April 2024, and Class 2 contributions were abolished entirely for the 2024-25 tax year onwards — although voluntary Class 2 contributions remained available for those who wanted to maintain certain benefit entitlements. For director-shareholders drawing a director's salary, the Class 1 cut moved the optimum salary point fractionally upward.
Full expensing made permanent
The three-year full expensing window introduced in the Spring Budget was confirmed as a permanent feature of the corporation tax system. The OBR scored the permanent extension as a £10 billion-plus annual measure, making it the single largest tax cut in the Statement by a wide margin. For SMEs with continuing capital expenditure plans — manufacturers, logistics businesses, IT-intensive companies — the permanence removed the artificial March 2026 cliff edge and allowed multi-year investment planning at a stable effective relief rate.
For unincorporated businesses, the Annual Investment Allowance remained at £1 million as the equivalent relief. The interaction between full expensing, Annual Investment Allowance, and marginal relief continued to require careful modelling for companies in the £50,000 to £250,000 marginal band.
The merged R&D scheme
The two existing R&D schemes — the SME scheme and the Research and Development Expenditure Credit (RDEC) — were merged from accounting periods beginning on or after 1 April 2024 into a single above-the-line credit modelled on RDEC. The headline merged credit rate is 20%, gross of tax, producing an effective net relief of approximately 15% to 16.2% depending on the company's corporation tax position.
For R&D intensive loss-making SMEs — companies with qualifying R&D expenditure representing at least 30% of total expenditure (reduced from the 40% threshold announced in March) — a separate Enhanced R&D Intensive Support scheme was introduced, offering an enhanced deduction of 86% and a payable credit at 14.5%. The reduction in the intensity threshold from 40% to 30% materially widened the set of eligible companies and meant that several of our R&D-active clients re-entered the intensive support regime from April 2024.
Our corporate tax team rebuilt every active R&D claim methodology in the months following the announcement. The merged scheme introduces new rules on subcontractor expenditure, overseas costs, and PAYE/NIC caps that did not exist in the legacy SME scheme.
Investment Zones and Freeports extended
The Autumn Statement extended the tax reliefs available within Freeport tax sites from five years to ten years, and announced an extension of Investment Zone tax reliefs on the same basis. For clients operating within designated zones, the extension materially changed the present value of locating capital expenditure inside the zone boundary. Several clients reopened conversations about expanding within zone footprints rather than at existing sites.
What was not in the Statement
The threshold freezes to April 2028 remained in force. The personal allowance stayed at £12,570 and the higher rate threshold at £50,270. The CGT annual exempt amount was confirmed to fall to £3,000 from April 2024 as previously announced. The dividend allowance was confirmed to fall to £500 from April 2024. The £100,000 high-income child benefit charge threshold — increasingly punishing for middle earners — was left in place, although it was finally raised to £60,000 in the Spring Budget of March 2024.
The verdict
The Autumn Statement of 2023 was the first net tax-cutting Statement of the post-2022 period and signalled the beginning of an election cycle that would dominate the Spring Budget of March 2024. For owner-managed businesses, the durable structural change was the permanence of full expensing — a relief that, three years on, has materially altered investment timing decisions across the manufacturing, logistics, and technology sectors we work with.
If you would like to model the long-run impact of full expensing on a planned investment programme, book a corporate tax planning call with our team.