On Wednesday of last week, Jeremy Hunt unveiled his Autumn Statement. Despite speculation about potential reductions in inheritance tax, no adjustments were made. The major announcement centered around the reduction in National Insurance, while tax thresholds, as well as ISA and tax-free allowances, remained unchanged.
In this blog, we have summarised the main elements of the Autumn Statement that are relevant to the majority of our clients. Please note that all changes are assumed to take place in April 2024 unless stated. Any measures announced remain potentially subject to change until enacted into legislation.
If you have any questions about how this will impact your personal circumstances, please get in touch.
National Insurance:
- The main rate of Employee National Insurance (Class 1) will be reduced from 12% to 10%. This will come into force in January 2024.
- The main rate of Self-Employed National Insurance (Class 4) will be reduced from 9% to 8%. Class 2 National Insurance (which was £3.45 a week) is to be abolished. Credits toward benefits, such as the state pension, will be automatically allocated if profits are above the required thresholds. These changes won’t be made until April 2024.
Pensions:
- The state pension is to be increased by 8.5%. For those receiving the full new state pension, it will increase from £204 a week to £221 a week Those currently on the old state pension will experience an equivalent percentage increase.
- The government intends to conduct a consultation regarding a “one pot for life” pension initiative. This initiative aims to empower individuals to select the pension scheme where their workplace auto-enrolment contributions are directed.
- Further information on the abolition of the Lifetime Allowance has been provided and additional guidance is expected over the coming weeks. We will be in contact with those who may be impacted by any of these changes.
ISAs:
- You’ll have the option to contribute to multiple ISAs of the same type (such as cash or stocks and shares) within a single tax year. Presently, you’re limited to paying into one ISA of each type per tax year.
- Partial transfers from ISAs will be allowed during the current tax year.
- The age for opening Adult Cash ISAs will increase from 16 to 18.
State benefits and support:
- The National Living Wage (also known as the National Minimum Wage) will increase from £10.42 an hour to £11.44. This higher rate will also be extended to those aged 21 and 22 in addition to those aged 23 and over.
- Universal Credit and other working-age benefits are to increase by 6.7%.
- Those claiming benefits and deemed able to work but refusing to seek employment could lose access to their benefits.
Business:
- The Full expensing tax break which allows companies to deduct spending on new machinery and equipment from profits will be made permanent.
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