On 22 November 2023, the chancellor, Jeremy Hunt, presented his Autumn Statement to the House of Commons.
Amongst a backdrop of uncertainties such as the cost-of-living crisis, global tensions and an upcoming general election, the UK population were eager that the budget would show signs of optimism.
From a wider economic viewpoint, the Office of Budget Responsibility forecast:
- The economy will grow by 0.6% this year and 0.7% next year.
- Inflation (rate of prices rising) will fall to 2.8% by the end of 2024.
Beyond the broader picture, we’ve put together a summary of some of the Autumn Statement’s key points and how they might affect you.
National Insurance
For employees
From 6 January 2024, for people earning between £12,570 and £50,268 the main 12% rate of employee National Insurance contributions has been cut to 10%. The chancellor claims this will affect 28 million people, with a person on an average salary of £35,000 saving £450.
Note: This only partially offsets the fact that National Insurance and Income Tax bands (thresholds) are already frozen until 2028. Consequently, some pay rises could move you into a higher tax bracket or will see a greater proportion of your income taxed than you might expect.
For the self-employed
- Mandatory Class 2 National Insurance payments by self-employed people earning more than £12,570 will be ‘abolished’ from 6 April 2024. This requires those people to pay a flat rate of £3.45 a week.
Note: If your profits total to over £6,725 your entitlement to benefits and state pension will be preserved. If your profits are lower than £6,725 you will still need to pay £3.45 a week voluntarily to maintain your entitlement to benefits and state pension.
- Class 4 National Insurance for self-employed paid on profits between £12,570 and £50,270 will be cut from 9% to 8% from 6 April 2024.
For those affected it’s estimated these changes will be worth an average of £350 a year.
Personal tax
- From 6 April 2024, Individual Saving Account (ISA) schemes will be simplified to include a greater scope of investments. This will:
“
- allow multiple subscriptions in each year to ISAs of the same type, from 6 April 2024
- remove the requirement to make a fresh ISA application where an existing ISA account has received no subscription in the previous tax year, from 6 April 2024
- allow partial transfers of current year ISA subscriptions between providers, from 6 April 2024 ”
(View HMRC’s full information on the ISA changes here)
Note: From current available information, it is not yet clear whether these changes will mean people with cash ISAs can open multiple cash ISAs a tax year. Those with existing cash ISAs that must be renewed each year to get the best interest rates should be aware of this.
- From 6 April 2024 Individuals with an income over £150,000, which is taxed via PAYE, will not be required to submit an Income Tax Self-Assessment return, unless they have another source of income that must be reported to HMRC.
- Despite some anticipation of reforms to Inheritance Tax, this was not included as part of the chancellor’s latest statement. However, it has been mooted that possible changes could be included as part of his Spring Budget.
Business tax
- Full Expensing relief has been made permanent. Businesses will be able to claim 100% capital allowances on qualifying plant and machinery investments. This is in addition to the £1 million annual investment allowance (AIA).
Read our article on Full expensing here.
- The 75% business rates discount for retail, hospitality and leisure firms has been extended to the 2024/25 tax year, allowing businesses to claim relief up to £110,000.
Wages
- The National Living Wage will increase from £10.42 to £11.44 an hour from 6 April 2024 and will include those of 21-years-old and above.
- The minimum wage for 18 to 20-year-olds rises will rise from £7.49 to £8.60 an hour.
- The minimum wage for under-18s will rise from £5.28 to £6.40 an hour.
- The apprentice rate will rise from £5.28 to £6.40 an hour, applying to those under 19, or those over 19 in the first year of their apprenticeship.
Benefits
- From 6 April 2024, Universal Credit and other working-age benefits will increase by 6.7% to reflect the inflation rate in September.
- The Local Housing Allowance, which determines the level of housing benefit and Universal Credit people receive to pay rent, has been frozen since 2020, but will be increased to 30% of local rents, as the price of renting has risen by almost a third. The chancellor claims this reform will be worth £800 for some households next year.
- Those claiming benefits will face compulsory work experience if they fail to find a job within 18 months. Some claimants who refuse work, or to engage with job centre staff, may need to reapply for benefits, so could lose access to them for a period of time.
- Work Capability Assessment to be reformed in line with the modern trend of working from home. £1.3 billion pounds of funding has been promised to help those with health conditions or disabilities find jobs.
Pensions
State pension payments will increase by 8.5%, aligning with average earnings and adhering to the government’s previous commitment to the ‘triple lock.’
From April 2024:
- The new, full state pension will be worth £221.20 a week (for those who reached state pension age after April 2016).
- The old, basic state pension will be worth £169.50 a week (for those who reached state pension age before April 2016).
- People saving for their pension will have the legal right to ask their employer to pay into a retirement fund of their choice. This will give them more control over how their pension fund is built by reducing the complication of having multiple small pension pots as they move between jobs.
Whilst these are some of the key announcements, the full Statement includes 110 measures, so we encourage you to check this out to explore the reforms above in more detail and stay abreast of other changes.
If you require any guidance as a result of any of the reforms made in the Autumn Statement, please get in touch with us. A member of our team will be happy to assist you…