22nd November 2023
The Chancellor’s Autumn Statement has brought several significant changes that will impact both individuals and businesses. The key points are:
- National Living Wage Increase: From April next year, the National Living Wage will rise by 9.8%, from £10.42 to £11.44 per hour. This increase, described as “the largest ever cash increase” in the National Living Wage, could mean up to £1,800 extra per year for a full-time worker. Notably, workers aged 21 and 22 will also be eligible for this higher wage for the first time.
- National Insurance Rate Cut: Starting from January 6, the main employee National Insurance rate will be cut from 12% to 10%. This change is expected to benefit 27 million people, with an average annual saving of over £450 for someone earning £35,000.
- Economic Growth and Inflation Outlook: The Office for Budget Responsibility (OBR) has revised its growth forecasts, indicating slower growth in the coming years due to persistent inflation and higher interest rates.
- Benefits System Tightening: There will be stricter conditions for benefit claimants. After 18 months of job-seeking, claimants must participate in a mandatory work placement, and those not engaging in the work search process for six months risk having their benefits stopped.
- Business Tax Breaks and Support: The Chancellor has made permanent the “full expensing” for businesses, allowing them to claim back 25p in corporation tax for every £1 invested in IT, machinery, and equipment. This move represents a significant tax cut for businesses, particularly those with heavy equipment investments.
- Support for the Self-Employed: The “Class 2” National Insurance charge for self-employed individuals earning over £12,570 will be abolished, saving the average self-employed person £192 annually. Additionally, “Class 4” National Insurance will be reduced by 1 percentage point from April.
- Business Rate Relief Extension: The small business multiplier will be frozen for another year, and the 75% discount on business rates for retail, hospitality, and leisure businesses will also be extended.
- Investment in Strategic Sectors: The government is committing funds to various sectors, including £4.5 billion for manufacturing up to 2030, and £500 million for UK artificial intelligence.
- Pension Pot Reforms: The government will consult on reforms to allow pension savers a legal right to require new employers to contribute to their existing pension pots.
- Energy Infrastructure Benefits: Individuals living close to new transmission infrastructure may receive up to £10,000 off their electricity bills over 10 years.
These changes present both opportunities and challenges. We recommend reviewing your financial and tax planning strategies in light of these announcements. For personalised advice and how these changes specifically impact you or your business, please contact our team.