Autumn Statement 2023

Chancellor Jeremy Hunt delivered the latest Autumn Statement on the 22^nd of November 2023, with the focus being very much on growth.

The overall reaction to the announcement has been a positive one, particularly from the UK’s self-employed sector, with the Statement highlighting 110 measures in total for businesses. However, there have also been concerns and calls for the government to do more.

For example, Andy Chamberlain, Director of Policy at IPSE, said, “Whilst it’s a welcome relief to feel there is some support on offer from government, the self-employed sector is still reeling from gaping gaps in support during the pandemic and the implementation of the off-payroll working rules, which have had a devastating impact on hundreds of thousands.

“Today’s announcement is a welcome step in the right direction, but the government still has much more to do to win back the support of the sector.”

Here’s what you need to know about the latest Autumn Statement:

Income tax

All income tax rates will stay the same (Basic at 20%, Higher at 40% and Additional at 45%), but the government has reduced the point at which individuals pay the additional rate from £150,000 to £125,140.

This will be put in place for the rest of the current tax year and will continue for 2024/25.

Income tax allowances will also stay at their current levels.

Dividends

Dividend rates will remain as:

• Basic rate – 8.75%
• Upper rate – 33.75%
• Additional rate – 39.35%

However, the Dividend Allowance will be reduced from £1,000 to £500 – it’s been estimated that this will affect 4.4 million individuals next year, with the average loss being around £155.

National Insurance Contributions

There have been some major changes made to the National Insurance Contributions (NICs) system:

With regard to employees and NICs, the government will cut the main rate of Class 1 NICs from 12% to 10% from the 6^th of January 2024 – the government say this will provide a tax cut for 27 million working people, with the average worker on £35,400 receiving a cut in 2024/25 of over £450.

Looking at the self-employed, Class 2 NICs are being abolished starting from the 6^th of April 2024. This means that:

• Self-employed workers who earn above £12,570 won’t need to pay Class 2 NICs, but will still continue to receive access to certain contributory benefits, such as the State Pension.
• Those who earn between £6,725 – £12,570 will continue to have access to contributory benefits (including the State Pension) through a National Insurance credit, without paying NICs.
• Those who earn under £6,725 and others who pay Class 2 NICs voluntarily to gain access to contributory benefits, will be able to continue doing so.

A self-employed worker who currently pays Class 2 NICs will now save at least £192 per year.

The government will also cut the main rate of Class 4 self-employed NICs from 9% to 8% from the 6^th of April 2024.

Business Rates

The small business rates multiplier has been frozen for another year, plus, the current 75% business rates relief for eligible retail, hospitality and leisure properties has been extended for one year in 2024/25.

National Living Wage / National Minimum Wage

Changes to the National Living Wage (NLW) and the National Minimum Wage (NMW) will come into effect from 2024.

NLW will be extended to 21 and 22-year-olds with the rates as follows:

• NMW – £11.44
• Those aged 18-20 – £8.60
• Those aged 18-20 – £6.40
• Apprentices – £6.40

Making Tax Digital

Following a review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses, the government has decided to maintain the current MTD threshold at £30,000 and plan on making design changes to simplify and improve the system.

These changes will come into force from April 2026.

Government to help British businesses

With the aim to increase business investment, the government has announced a number of measures which they say could raise around £20b per year from businesses in a decade’s time.

These include:

• Full Expensing to be made permanent – this was initially introduced as a temporary measure in the 2023 Spring Budget and allows companies to deduct spending on new machinery and equipment from profits.
• The removal of barriers to critical infrastructure by reforming the UK’s inefficient planning system and speeding up electricity grid connection times.
• A package of pension reform and driving private investment from insurers into infrastructure by legislating for key reforms to Solvency II.
• Making £4.5 billion available in strategic manufacturing sectors such as auto, aerospace, life sciences and clean energy from 2025 for five years.
• New Investment Zones.
• From April 2024, firms bidding for government contracts over £5 million will have to demonstrate that they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025 and then 30 days in future years.
• Changes to Research and Development (R&D).

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.