Autumn Statement 2022 - Indirect & Other Taxes

VAT Registration threshold to remain frozen

The government has confirmed that the VAT registration threshold of £85,000 and deregistration threshold of £83,000 will be maintained at current levels until 31 March 2026 rather than 31 March 2024. These threshold have been unchanged since 1 April 2017.

This measure means that more businesses will fall within the VAT net and be net contributors. It remains the case that some businesses choose to limit growth to avoid the ‘cliff edge’ effect of exceeding the VAT threshold. Others may seek to avoid exceeding the threshold through planning and evasion.

A longer-term solution may therefore be required after March 2026.

Import Tariffs Reduced

Import tariffs on over 100 goods will be suspended for two years from January 2023 with tariff savings of up to 18%. The measure is in response to requests from businesses and stakeholders to reduce costs in certain sectors. Treasury documents give examples such as aluminium frames used by bicycle manufacturers and ingredients used by food producers.

The reduction in the cost base will be welcomed by business. However, overseas suppliers, who are also suffering from the global economic slump, may seek to increase raw prices. Businesses importing affected products would be advised to carefully review trading terms with suppliers.

Stamp Duty Land Taxes

For purchasers of residential property in England and Northern Ireland, the following measures on Stamp Duty will be made temporary, ending on 31 March 2025: 

• the increase in the SDLT Nil rate threshold from £125k to £250k  

• the increase in the SDLT Nil rate threshold from 300k to £425k for first-time buyers  

• the increase in the maximum purchase price for relief for first time buyers from £500k to £625k 

Annual Tax on Enveloped Dwellings (ATED) 

The 2023/24 annual chargeable amounts for ATED will be routinely increased by the September 2022 CPI increase figure of 10.1%, as follows: 

Property value	Annual charge
More than £500,000 up to £1 million	£4,150
More than £1 million up to £2 million	£8,450
More than £2 million up to £5 million	£28,650
More than £5 million up to £10 million	£67,050
More than £10 million up to £20 million	£134,550
More than £20 million	£269,450

HMRC & Tax avoidance

The Chancellor announced a package of measures to tackle tax avoidance, evasion and wider non-compliance that is estimated to raise £1.7 billion over the next five years. The package includes a £79 million fund for additional staff to tackle more cases of serious tax fraud as well as wealthy taxpayers’ non-compliance. This investment is estimated to raise £725 million, and is in addition to the £292 million of additional funding announced at the 2021 Spending Statement.

HMRC challenges taxpayers’ liabilities through a series of campaigns and ‘nudge letters’.  These focus on areas identified as being particularly at risk of fraud and error, and therefore most likely to generate significant additional revenues for the Exchequer. 

As their name suggests, nudge letters are designed to prompt taxpayers to reconsider whether they need to pay more tax to HMRC. Usually, HMRC issues them when it has information that suggests tax returns are incomplete. This could be data from overseas tax authorities about people’s non-UK bank interest, or discrepancies between Companies House data and tax returns. Recent nudge letters include:

• Letters to offshore corporates owning UK property whom HMRC considered failed to pay tax on property sales and other transactions

• Letters to people who drive for online platforms such as Uber or Lyft, explaining that HMRC has information suggesting they did not disclose all their earnings from this work

• Letters to landlords who HMRC considers failed to tell HMRC about all their rental income in 2020/21

• Letters to companies claiming R&D tax relief encouraging them to review their claims

HMRC is also devoting resources to tackle fraudulent and erroneous R&D tax claims, undertaking detailed checks before paying out the claims, or investigating cases on which refunds were made where the claims appear excessive. These compliance checks are undertaken by HMRC’s Fraud Investigations Service and its new R&D Anti-Abuse Unit, amongst others.

Any taxpayers who receive these nudge letters or face an R&D investigation should seek specialist advice on how best to respond. How many years’ tax HMRC can collect or reclaim depends on why mistakes occurred. This also affects the levels of any tax-geared penalties.

If you have any questions, please contact Claire McGuigan, Karen Doherty or Lorraine Nelson.

With thanks to our colleagues in BDO UK.