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The Chancellor of the Exchequer, Jeremy Hunt, delivered the government’s Autumn Statement on Thursday, 17 November 2022.

These latest fiscal measures follow on from the announced by the Chancellor on 17 October 2022 which, in a bid to reassure nervous markets, reversed most of the former Chancellor Kwasi Kwarteng’s which was delivered on 23 September 2022.

In delivering the Autumn Statement, the Chancellor referenced the ‘unprecedented global headwinds’ which represent a significant challenge to the UK economy citing, in particular, the surge in energy prices exacerbated by the conflict in Ukraine. The government hopes that the Autumn Statement will achieve a fine balancing act of assisting with tackling the cost-of-living crisis, enabling it to reduce the level of public debt as a share of GDP over time and also providing markets with the requisite confidence to ensure the cost of government borrowing is kept low. In addition, following the market unrest precipitated by the Growth Plan, the Chancellor was at pains to emphasise the importance of the complementary relationship between the Treasury and the Bank of England in curbing inflation, which hit a 41–year high of 11.1% in October 2022.

The tax measures announced in the Autumn Statement fall short of radical tax reform and the reduction in personal tax thresholds and allowances reflects the government’s intention that the wealthier members of society should bear the greatest tax burden.

From a business tax perspective, businesses will be concerned to see the reduction in the tax benefit of R&D relief for SMEs but the reforms are perhaps not surprising in light of the House of Lords Finance Bill Sub-Committee inquiry into R&D tax reliefs and wider concerns over large-scale fraud in this area. Businesses will likely continue to take great interest in the government’s direction of travel in respect of tax relief for R&D, particularly, as it would be expected that R&D activity and investment will be of cardinal importance in fostering growth in the UK economy.

Furthermore, the increase in the rate of the energy profits levy (and its extension to March 2028) will also likely have been expected by oil and gas companies. However, the temporary 45% electricity generator levy applied on the extraordinary returns being made by electricity generators will likely cause consternation among in-scope businesses.