Business Tax Shift: Energy Windfall Unleashed at 35% & R&D Relief Recalibrated

Jeremy Hunt’s Tax Shake‑Up: Windfalls, Corporate Yields & R&D Riddles

Sir Jeremy Hunt, fresh off the “Autumn Statement” podium, rolled out a trio of tax twists that sent economists piling on pomegranates (or the more sober alternative: spreadsheets). Here’s the low‑down in plain English, with a splash of wit.

Windfall Tax Gets a Breather (and a Boost)

Windfall tax now 35% – the cheapest way to climb into the renewable future.
Temporary 45% levy on electricity generators – because power producers deserve a middle‑man for a reason.
Extension up to 2028 – a longer haul for the tax‑gathering marathon.
Expected revenue: roughly £14 billion next year, enough to keep the Royal Mint busy.

Corporation Tax: The Relatively Calm Storm

Corporate tax’s journey from 19% to 25% (effective April 2023) will go forward unchanged, as per Hunt’s first‑in‑office pledge. The buzz? Some companies are already crunching numbers, hoping to tweak when they hit the tax tablet.

R&D Relief: A Double‑Edged Sword

From April 2023, the research & expenditure credit rate jumps from 13% to 20%.
Enhanced deduction for SMEs falls from 130% to 86% – a bit of a hit on the small‑biz crowd.
Payable credit rate drops to 10% – the financial side of stimulation is tightening.

As Nick Cartwright of Evelyn Partners mused, businesses are hoping for steady skies so they can plan without that constant “change at the horizon” anxiety. Nonetheless, with the big IPO of corporation tax looming, some may try to snatch up taxable concessions before April, trading “just in time” for the new rate.

Annual Investment Allowance Stays Alive

The one‑million‑pound annual investment allowance (AIA) remains, encouraging companies to buy fresh plant and machinery. Yet, inflation gnaws at its generosity over time. Think of it like a birthday cake that shrinks as you slice it.

Simplification? A Vague Dream?

“We crave a tax system that’s simple and predictable,” the consulting note declares. However, with the proposed closure of the Office of Tax Simplification, the push for simplicity must come from inside the government’s own tea‑time meetings. We’re holding our hands out to the next Budget, hoping for tangible action.