Autumn Statement 2023 – the headlines
On Wednesday 22nd November, the political spotlight was on Chancellor Jeremy Hunt as he delivered his Autumn Statement to the House of Commons. While falling short of a full Budget, the annual Autumn Statement is a significant financial update outlining the government’s latest economic forecasts, fiscal policies and proposed changes to taxation and public finances.
Mr Hunt teased his Autumn Statement as “110 measures to help grow the economy” and, while we’ll not go into them all here, let’s look at some of the headline measures.
National Living Wage
The National Living Wage (NLW) has rapidly increased over the last few years, and last week’s announcement did not buck that trend.
- From 1st April 2024 the NLW will increase from 9.8% to £11.44
- Also, the age threshold to which the NLW applies will be lowered from 23 to 21 years old.
National Insurance for employees
- Class 1 employee NIC will be cut from 12% to 10%
- This will come into effect from 6th January 2024
- The government estimates that a worker on £35,400 will receive an additional £450 in 2024/25
National Insurance for the self-employed
- Class 2 NIC, a weekly rate paid irrespective of earnings will be abolished
- Class 4 NIC will be reduced from 9% – 8%
- These changes come into effect from 6th April 2024
Announced prior to the Autumn Statement but still worthy of note – the government will legislate to allow HMRC to reduce the PAYE liability of a deemed employer to account for tax already paid by a worker and their limited company.
In other words the deemed employer’s PAYE liability will be reduced by the income tax or corporation tax already paid.
This will apply to PAYE assessed from 6th April 2024 on deemed employment payments made on or after 6th April 2017.
- The state pension will increase by 8.5% from 6th April 2024, up to £221.20 a week
- The Chancellor also affirmed support for the “triple lock” – a commitment to increase the state pension by earnings growth, inflation or 2.5%, whichever is the highest.
- The government will consult on “pot for life” pension reforms, which will give workers a new legal right to require a new employer to pay pension contributions into their existing pension.
Construction Industry Scheme (CIS)
Under CIS most subcontractors get 20% or 30% tax deducted at source unless HMRC have granted them gross payment status.
The government will introduce reforms to the CIS including adding VAT as part of the gross payment status compliance test.
This will give HMRC more power to remove gross status immediately in cases of fraud.
Other key tax announcements
- 75% business rate discount for retail, hospitality and leisure extended to 2025
- Freeze on all alcohol duty until 1st August 2024
- A permanent extension of the full expensing capital allowance scheme
- Confirmation of the new merged R&D scheme
- Freeports extended for another 5 years
- Universal Credit and other benefits to increase by 6.7%
Notably, no changes announced to Income Tax, Inheritance Tax, or Stamp Duty – there has been speculation that these could be the Chancellor’s “rabbit-in-the-hat” ahead of a General Election.
- The Chancellor said forecasts from the OBR show the economy will grow by 0.6% this year and 0.7% next year
- It is now 1.8% larger than before the pandemic, according to official figures
- Inflation is expected to fall by 2.8% by the end of 2024
- Inflation is expected to stay “higher for longer” and it won’t drop to the Bank of England;s 2% target until mid-2025
- This will have the effect of keeping interest rates elevated.
Join our webinar
Join Liquid Friday’s COO Joe Taffurelli for a special webinar at 2pm on Monday 27th November. This will look at some of the key measures announced in the Autumn Statement and their implications for businesses and individuals.Register Now