Chancellor Jeremy Hunt delivered the Autumn Statement on 22 November, promising that the government will “reduce debt, cut tax and reward work”. New measures announced include a reduction in national insurance for both the employed and self-employed, pension reforms, and cuts to business tax.
Personal measures
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National insurance cuts
For employees on between £12,570 and £50,268, the current national insurance (NI) rate is 12% on earnings and 2% on earnings above that. This initial contribution is set to be cut from 12% to 10% from 6 January 2024.
However, please note that this only partially offsets the fact that NI and income tax thresholds are already frozen until 2028. That means any kind of pay rise could put you into a higher tax bracket, or mean a greater proportion of your income is taxed than would otherwise be expected.
For the self-employed, the Class 2 national insurance contribution (NIC) of £3.45 a week is to be abolished from 6 April 2024. Class 4 national insurance will be reduced from 9% to 8% from April 2024.
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Pension reforms
The Chancellor announced that the Pensions Triple Lock and Pension Credit will be protected and will rise in April 2024 by 8.5%.
The government has also launched a consultation on a ‘pot for life’ pensions model, which will give pension savers the “legal right to require a new employer to pay pension contributions into their existing pension”. Under the new model, savers would be given the option to ask a new employer to pay their pension contributions into their existing pot, rather than having to consolidate pensions themselves.
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Alcohol duty
The government is freezing alcohol duty to August 2024. This takes 3p off the duty cost of an average pint of beer. The Chancellor stated that the government remains committed to its “Brexit Pubs Guarantee”, saying that the freeze of alcohol duty will mean that “duty on a pint is always lower than in the shops”.
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Tobacco duty
Tobacco duty is to rise by 2% above inflation, with the duty on hand-rolling tobacco to rise an additional 10% above inflation.
Business measures
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Business rate relief
The government will freeze the small business multiplier for a further year and extend the 75% discount on business rates up to £110,000 for retail, hospitality and leisure businesses for another year as well. Hunt says these measures will save the average independent shop over £20,000 and the average independent pub over £12,800 next year. The business rates discount for businesses in the hospitality, retail and leisure sector has also been extended.
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Full expensing
The Chancellor will make the “full expensing” scheme permanent. Known previously as the super deduction, this allows businesses to offset investment in items such as new IT equipment and factory machinery against tax. He added that the total package of measures will help increase business investment by about 1% of GDP.
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Minimum wage
Minimum wage will increase by more than a pound to £11.44 per hour from April 2024. It is currently £10.42 an hour for workers over 23. The rate will also apply to 21 and 22-year-olds for the first time. The Chancellor stated that earnings of full-time workers would rise by £1,800 a year as a result of the move.
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Planning applications
New measures will allow local authorities to recover the full costs of major business planning applications, in return for being required to meet guaranteed faster timelines. If they fail, these fees will be refunded automatically with the application being processed free of charge, Hunt says. The chancellor promised, “a prompt service or your money back.”
