On 22 November 2023, Chancellor Jeremy Hunt presented the Autumn Statement 2023 amidst a tough time marked by a cost of living crisis and an upcoming general election.

This year has been tough, mainly due to the inflation making constant news. Although inflation has dropped, it remains above the Bank of England’s 2% goal at 4.6% for the 12 months leading to October 2023.

Before his speech, Hunt was under pressure to ease taxes for households and businesses. There were also talks about a possible Inheritance Tax reduction, but it didn’t happen.

During his speech, Hunt mentioned that the British economy’s plan was successful, managing to steer clear of a predicted recession this year. However, he was careful to note that there’s more to be done. He outlined 110 measures aiming to “reduce debt, lower taxes, and encourage employment.”

Here are the main highlights from the Autumn Statement and their potential implications for you.

National Insurance cut for employees and self-employed workers

The chancellor made a move to decrease National Insurance (NI) for 29 million people who work.

Starting from 6 January 2024, the main employee NI rate will drop by two percentage points, going from 12% to 10%. This change means that the average employee earning £35,400 annually will save over £450 each year.

Moreover, from April 2024, the compulsory Class 2 National Insurance contributions (NICs) for self-employed individuals making more than £12,570 a year will be removed. This adjustment is expected to save the average self-employed person around £192 annually. Importantly, self-employed workers will still have access to contributory benefits like the State Pension.

In 2024/25, Class 4 NICs paid by self-employed workers on earnings between £12,570 and £50,270 will fall from 9% to 8%.

Combined, these two changes will result in an average self-employed person earning £28,200 saving £350 a year from 2024/25.

The State Pension “triple lock” will remain in place

After weeks of uncertainty, Hunt confirmed during the Autumn Statement that the State Pension “triple lock” will be honoured.

This “triple lock” ensures that the State Pension increases annually by the higher of three measures:

  • Inflation, as gauged by the Consumer Prices Index (CPI) in September of the previous year.
  • The average rise in wages across the UK from May to July of the previous year.
  • A minimum increase of 2.5%.

Wage growth of 8.5% means someone on the full new State Pension will receive more than £900 a year extra in 2024/25.

Similarly, Pension Credit will also rise by 8.5% in April 2024.

Abolition of pension Lifetime Allowance confirmed

The Chancellor didn’t introduce new updates regarding pension allowances in the Autumn Statement 2023 but confirmed the abolition of the pension Lifetime Allowance from 6 April 2024, as previously reported.

Hunt also disclosed intentions to discuss a “pot for life” pension scheme. This proposal would grant pension savers the right to select the scheme where their employer deposits pension contributions. This initiative aims to assist individuals in handling retirement savings and potentially decrease the number of people with numerous small pensions.

ISA holders will benefit from more flexibility

The annual subscription limits for ISAs (£20,000), Junior ISAs (£9,000), Child Trust Funds (£9,000), and Lifetime ISAs (£4,000, excluding government bonus) will stay unchanged for 2024/25.

Yet, modifications are on the horizon to offer savers and investors increased flexibility.

Starting April 2024, ISA holders can put money into multiple ISAs of the same type within a tax year. Additionally, they’ll have the option to partially transfer funds between providers.

Second, investors with an Innovative Finance ISA will be able to invest their money in a greater range of assets, including long-term asset funds and open-ended property funds with extended notice periods.

Other measures

National living wage

Hunt unveiled the most significant rise to the UK’s national living wage, which will surge by 9.8% to £11.44 per hour. Furthermore, starting in April 2024, this new rate will encompass 21- and 22-year-olds for the first time.

This increase is projected to aid nearly 2.7 million individuals, with full-time employees on the national living wage expecting a yearly income increase of over £1,800.

Benefits uprated

Aligned with September 2023 inflation data, Hunt revealed a 6.7% increment in benefits. Additionally, he detailed an augmentation in the Local Housing Allowance, extending an average of £800 in support to approximately 1.6 million households in the upcoming year.

An overhaul of the benefits system was also disclosed. Those receiving benefits and unable to secure employment for over 18 months will be required to undertake work experience placements. Moreover, stricter penalties will apply to long-term unemployed individuals deemed insufficiently engaged in job-seeking activities.

Business rates discount to continue for another year

The 75% business rates discount for retail, hospitality, and leisure businesses has been prolonged for an additional year. This extension serves as a welcomed uplift for high street shops, pubs, and similar enterprises.

Furthermore, the multiplier for small business premises remains frozen.

Freeze on alcohol duty

To support pubs and related establishments, the Chancellor declared a freeze on all alcohol duty, extending until 1 August 2024.

Full expensing

Businesses will continue to benefit from full expensing. It allows firms to offset spending on plant and machinery against profits.

The measure was previously set to expire in March 2026 but has been made permanent.

Enterprise Investment Scheme and Venture Capital Trusts

To support early-stage, innovative companies, both the Enterprise Investment Scheme and Venture Capital Trusts, which provide a tax break to investors, have been extended to 2035.

Get in touch

If you have any questions about how the Autumn Statement 2023 will affect you and your finances, please get in touch.

Please note: All information is from the Autumn Statement 2023 document and the government’s Autumn Statement news bulletin.

The content of this Autumn Statement summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

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