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Autumn Statement 2023

Today the Chancellor, delivered his Autumn Statement, which as a result of the drop in inflation, tax cuts were the main topic of discussion. Below is a summary of some of the main points of interest, but the full statement can be found here.

National Insurance Cuts

Employee National Insurance is to be cut by 2% to 10% with effect from 6 January 2024.

Class 4 National Insurance for self employed will be cut by 1% to 8% from April 2024.

And Class 2 National Insurance, also paid by self employed, is to be abolished entirely, although those who need to make voluntary contributions towards their state pension record, will still be able to do so.

National Living Wage

From April 2024, the National Living Wage will rise from £10.42 per hour to £11.44 per hour. This will now apply to anyone over the age of 21.

Business Rates

The small business multiple is to be frozen for another year, and the 75% discount for retail, hospitality and leisure businesses is to be extended too.

Capital Allowances

Full expensing for capital expenditure will be made permanent, meaning companies will be able to get tax relief on the full cost of new plant and machinery in the year of purchase, in addition to the Annual Investment Allowance threshold.

Spring Budget 2023

The Chancellor Jeremy Hunt has unveiled his ‘Back to Work’ March Budget. Below we summarise some of the key points.

Taxes and thresholds
All of the changes to taxation will go ahead as previously announced in the autumn statement.

Investment Allowance 
The Annual Investment Allowance to be permanently increased to £1million. Additionally, there will be a new policy for capital expenditure introduced, to enable ‘full expensing’ in the year of purchase.

Pension Allowances
The £1million lifetime allowance is to be abolished, and the annual tax-free allowance is to be increased from £40,000 to £60,000.

Research and Development
Small and medium-sized businesses will be able to claim a credit of £27 for every £100 spent, if they spend 40% or more of their total expenditure on Research and Development.

Inflation
The OBR has said that the UK will not enter recession this year. Inflation is set to fall to 2.9% by the end of the year.

Childcare
The thirty hours of free childcare for working parents will be expanded to cover all children under five by September 2025.

Chancellor’s Autumn Statement

Here we are again, just 8 weeks after the last budget statement! Hopefully this one will make it through to implementation, but this time we are looking at tax hikes instead of tax cuts. Below are some of the important highlights in relation to tax, but the full statement can be found here.

Personal taxes

The point at which the 45% rate of income tax applies will be reduced from £150,000 to £125,140.

The allowances and bands for income tax and national insurance will be frozen until April 2028, which effectively means more people will pay more tax, and at higher rates, as a result of increasing wages and inflation.

The tax free dividend allowance will be reduced from £2,000 to £1,000 next year, and then to £500 from April 2024.

The Capital Gains Tax annual exemption amount is to reduce from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024.

Business taxes

As announced previously, the original planned changes to Corporation Tax will now go ahead, meaning that from April 2023, the new tax rate will be 25%, but to help protect small businesses a £50,000 small profits rate will be introduced, set at the current rate of 19%. Once a company’s profits rise above £50,000 a taper will apply, so that only businesses with profits above £250,000 will have to pay the full 25% rate.

Employers’ NIC thresholds are to be frozen, and the Employment Allowance remains at £5,000 per year.

The VAT threshold to remain at £85,000 for 2 years.