Understanding the UK Autumn Statement 2023

For Small Businesses:

National Insurance Adjustments:

Let’s start with National Insurance. The Class 1 Primary rate is dropping from 12% to 10% starting 6 January 2024. This is great news for your employees, as they’ll see a little boost in their take-home pay. For example, an employee earning £30,000 annually will pay less in NI contributions, increasing their net salary. However, remember, this doesn’t affect what you pay as an employer.
For the self-employed, the abolition of Class 2 NI from 2024/25 is a big deal. It means more money in your pocket if you’re a sole trader. Just keep in mind that Class 4 NI contributions are still in play for profits above £12,570.

Apprenticeship Levy and National Minimum Wage:

No changes to the Apprenticeship Levy, but the National Living Wage extension to those aged 21 and over, starting April 2024, might mean revising your payroll budget to accommodate the increased wages.

Corporation Tax and Capital Allowances:

A permanent 100% First Year Allowance for certain business expenditures is a boon. Think of it like this: if you buy new equipment for your business, you can deduct the entire cost from your taxable profits in the year of purchase.

R&D Tax Reliefs:

The merging of R&D tax relief schemes is a major overhaul. From April 2024, you’ll be working with a single, streamlined process. This could change how you approach R&D spending, so let’s make sure you’re on top of this.

HMRC’s Data Gaps:

HMRC is asking for more detailed information starting in the 2025/26 tax year. This includes specifics on dividends, self-employment periods, and employee work hours. It’s a bit more paperwork, but we can help you get everything in order.

For Individuals:

Income Tax and Allowances:

The freeze on personal tax allowances and thresholds could mean more taxes in the long run. Imagine you get a salary raise that pushes you into a higher tax bracket; you’ll end up paying more tax because the thresholds haven’t moved.

Universal Credit and Benefits:

The increase in Universal Credit and other benefits by 6.7% is a direct response to inflation. It’s a helpful boost if you’re on the receiving end, ensuring that benefits keep pace with the rising cost of living.

Pensions:

The new ‘pot for life’ system for pensions could make life a lot easier if you’re someone who changes jobs frequently. Your pension pot will now follow you to your new employer. And with the State Pension increasing by 8.5%, there’s a bit more financial security for pensioners.

ISA and Savings:

The unchanged ISA allowance limit means you’ll need to think creatively about how you save and invest.

Capital Gains Tax:

The halving of the Capital Gains Tax exemption to £3,000 from April 2024 is significant. If you’re planning to sell assets or investments, this could mean a higher tax bill.