Autumn Statement Summary
Last Wednesday, 22 November 2023, the Chancellor made his Autumn Statement, which included numerous measures which he says will “increase growth and reduce inflation and debt” and here we focus on the key points that will have the most significant impact on our clients.
The headline stealing announcement was the reduction in National Insurance for both employed and self-employed people:
National insurance for employees will be reduced by 2% from 12% to 10% on annual earnings between £12,570 and £50,270. The 2% rate on earnings over £50,270 remains in place. For anyone earning £35,400 per year this is a saving of £38.05 per month and for someone earning £50,270 or more this is a saving of £62.83 per month. Rather unusually this will come into effect from 6 January 2024 rather than the expected 6 April 2024.
For self-employed individuals the class 2 national insurance charge of £3.45 per week, applicable to those with profits of more than £12,570, has been abolished saving £192 per year from 6 April 2024. Those with profits over £6,725 will continue to get access to contributory benefits including the State Pension but it seems that those with profits less than £6,725 will have to continue to voluntarily make contributions to be able to access these benefits.
Class 4 National Insurance payable by self-employed workers on earnings between £12,570 and £50,270 will reduce by 1% from 9% to 8% from 6 April 2024, saving a maximum of £377 per year.
2. All income tax and national insurance thresholds remain frozen at the current level, somewhat offsetting the above savings as people move into higher tax brackets as a result of an increase in earnings resulting from inflation.
3. Full expensing on the purchase of qualifying assets is to become permanent rather than ending in March 2026 as previously announced. This allows the full cost of the asset to be offset against profits in the year of acquisition rather than spreading it across a number of years. It was also announced that the Government is considering extending this to asset leasing.
4. The Triple Lock on state pensions remains in place and, despite rumours to the contrary, was honoured in full by the Chancellor with him announcing an 8.5% increase to £221.20 from April 2024. This is of course welcome but could result in more pensioners being drawn into the income tax net as a result of the freezing of the tax free personal allowance at £12,570.
5. For businesses paying business rates there was some good news and some bad news:
Having been frozen for the last four years, the standard multiplier applied to properties with a rateable value of £51,000 or more is to be increased by inflation from 51.2p to 54.6p resulting in an increase in business rates of 6.7% from April 2024.
The small business multiplier for properties with a rateable value of less than £51,000 will be frozen again and remain at 49.9p so there will be no increase for these businesses.
The current 75% relief for hospitality and leisure is extended for another year to March 2025, meaning that for those currently claiming the relief, there will only be the inflationary increase from April 2024 rather than the expected 300% increase that would have resulted from the relief being abolished.
6. To reduce the problem of “small pot” pensions the Government intends to look at a lifetime provider model which would allow employees to have contributions paid into their existing pension scheme when they change employer. Hopefully any consultations will also consider how this will impact an employer having to make contributions to multiple different pension providers each month.
7. From 6 April 2024 the Government is looking to make a number of changes to ISAs to allow multiple subscriptions in each year to ISAs of the same type and partial transfers of current year subscriptions between providers.
FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.
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