On 22 November 2023, Jeremy Hunt delivered the ‘Autumn Statement for Growth’. The Chancellor is keen to stimulate economic growth and highlighted 110 measures for businesses. In addition, there were significant statements relating to National Insurance changes and also the reform of work-related state benefits.
Autumn Statement 2023 Key Points
- The income tax personal allowance and basic rate limit are fixed at their current levels until April 2028
- The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively
- Business Rates: The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25
- The capital gains tax annual exempt amount will be reduced from £6,000 to £3,000 from April 2024
- The government has announced that Full Expensing Capital Allowance to be made permanent
Read or download our sumary of the 2023 Autumn Statement here
National Insurance contributions changes announced
Employees and NICs
The government will cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024 so that employees can benefit as soon as possible. According to the government, 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.
The self-employed and NICs
The self-employed generally have to pay two forms of NICs: Class 2 and Class 4.
Firstly, the government will abolish Class 2 self-employed NICs from 6 April 2024. This means that, from 6 April 2024:
- Self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs but will continue to receive access to contributory benefits, including the State Pension.
- Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit without paying NICs.
- Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.
The government will set out the next steps on Class 2 reform next year.
This will mean that a self-employed person who currently pays Class 2 NICs will save at least £192 per year.Secondly, the government will cut the main rate of Class 4 self-employed NICs from 9% to 8% from 6 April 2024.
Dividend Tax Rates: Note to consider
The government has also confirmed that, from 6 April 2024, the rates of taxation on dividend income will remain as follows:
- the dividend ordinary rate – 8.75%
- the dividend upper rate – 33.75%
- the dividend additional rate – 39.35%.
As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%. The government will reduce the Dividend Allowance from £1,000 to £500 from 6 April 2024.
The Scottish and Welsh governments will make their announcements on the devolved elements of taxation policy in due course.
If you would like advice on corporation or personal Tax or any other aspect of tax planning or trust registration, please do contact us – the HB team is here to help with all your tax, cash flow, MTD VAT, and accounting questions and can help you make your money work harder for you and your business. If you would like to talk about how we can help you and your business, please feel free to contact the team on 01992 444466.
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