Advance news suggested that NI rates would be reduced in the Autumn Statement today, using the Fiscal drag which is the effect of not increasing tax free bands while wages continue to increase, effectively a stealth tax. This came true as he announced major changes for individuals and a tax giveaway for business:
National Insurance
- The Class 2 NIC “stamp" for the self employed earning over £12.5k pa is being abolished saving £192pa, but there will still be the option for voluntary payments to qualify for state pension for lower earners
- Self employed Class 4 NIC on earning over £12.5k pa are being reduced from 9% to 8%
- The employees Class 1 NIC on earnings between £12.5k and £50k is being reduced from 12% to 10%, from January 2024 once special legislation is introduced
For businesses
- The 100% First year allowance on capital expenditure with no upper limit to the value was only for 3 years to 2026, but that end date has now been withdrawn. This measure is being described as the biggest tax cut in modern British history, however the Annual Investment Allowance is likely to remain the preferred option for smaller businesses due to the more favourable treatment of the proceeds on disposal
- The 75% discount for retail, hospitality and leisure sectors to continue for another year
- Investment Zones and Freeport programmes to be extended from 5 to 10 year and new zones announced for Greater Manchester, the West and East Midlands
- Improvements to R&D tax credits and direct investment for the AI, film and life science industries
- Measures to be introduced to speed up planning applications for businesses and increase the new housing stock
For individuals
- Pensions - the triple lock will be honoured and the full 8.5% increase will come into effect from April 2024
- Alcohol duties: All will be frozen until August 2024
- Universal credit and other benefits will increase by 6.7%, based on September inflation figures
Other announcements
- Incentives to work - to unlock the potential we have at home, support for those with disability and the long term unemployed
- HMRC will be given resources to make sure everyone pays the tax they owe
- Inflation will reduce to 2.8% by the end of 2024 and below 2% by the end of 2025 according to OBR
The Autumn Statement is supposed to be more of an economic update than a traditional Budget but there is little to differentiate between these in recent years, especially with an election looming, perhaps the reason for the January change to employees NIC from January! Further details will be released over the next few weeks and you should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Shrewsbury, Shropshire – Accountants who “speak your language”