One 22 November 2023, Chancellor Jeremy Hunt presented his Autumn Statement to Parliament and started making, in his words, the long-term decisions necessary to strengthen the economy and build a brighter future. Fueled by falling inflation and stabilised public finances, focus is now being applied to reducing debt, cutting tax and rewarding hard work.
Headlines included generous National Insurance Contribution (NIC) cuts for workers and the self-employed and the ‘biggest permanent tax cut in modern British history for businesses’. Some other anticipated measures appear to be on hold ahead of a full Budget next Spring and an expected 2024 general election.
In this edition, we talk more about the Autumn Statement headlines and other measures announced. Please note that ‘tax years’ run to 5 April each year and that, for example, 2024/25 signifies the year to 5 April 2025.
For employees
In addition to income tax, all employees earning more than £12,570 ayear pay Class 1 NICs. The main rate of Class 1 NICs will be cut from 12%to 10% from 6 January 2024. This will come into effect from January2024 and, over a full year, the average worker on £35,400 will receive aNIC reduction of over £450. Workers earning more than £50,270 a yearwill receive a NIC reduction of £754.
The Class 1 NIC rate will remain at 2% for earnings above £50,270 ayear.
Similarly, there are no changes to the rate of employer’s Class 1 NICs,which remains at 13.8%.
For the self-employed
Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4.
Taken together these changes will result in an average self-employed person with profits of £28,200 saving £336 in 2024/25.
Class 2 NICs currently provide the self-employed with access to a range of state benefits, including the State Pension. From 6 April 2024, self-employed people with annual profits;
The government will uprate all working age benefits for 2024/25 by the September 2023 Consumer Price Index (CPI) of 6.7% and will continue to protect pensioner incomes by maintaining the promised ‘triple lock’ and uprating the basic State Pension, new State Pension and Pension Credit standard minimum guarantee for2024/25 in line with highest of the three possible measures, namely average earnings growth of 8.5%.
The biggest ever increase to the National Living Wage has been announced, with the government fully accepting the recommendations made by the Low Pay Commission. Eligibility forthe National Living Wage will also be extended by reducing theage threshold to 21-year-olds for the first time. It was previouslyfor those aged 23 and over only. From 1 April 2024 the minimum pay rates will be as follows:
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