Autumn Statement 2023

Jeremy Hunt’s ‘go for growth’ statement announced 110 growth-promoting measures to back British businesses, funded by increased receipts and better than expected economic performance.

Below we look at some of yesterday’s main points:

Personal Tax

There have been no changes to the tax-free personal allowance or tax thresholds.

No changes were announced to the taxation of dividend income. Therefore, the tax-free dividend allowance will fall to £1,000 in 2023/24 and will further fall to £500 in 2024/25.

No announcements made on CGT, the annual exemption currently at £6,000 for 2023/24 will be reduced in line with previous announcement to £3,000 in 2024/25.

The largest tax cut was experienced by the NICs, with a 2% cut on the rate of employee NICs on earnings between the lower and upper earnings limit from 12% to 10%.

This measure will be introduced on 6 January 2024 and will save up to £754 for an employee earning £50,270 or above.

Class 2 NICs are being abolished and will no longer be required to secure benefits for anyone earning above £6,725. Class 4 NICs have also been cut by 1% from 9% to 8% for profits between £12,570 and £50,270, giving savings of up to £377.

Pension Tax Relief

There was no mention of any changes in the way private and employee pensions will be taxed in the short term.

State pension in line with the Conservative commitment will continue to be uprated, which will be seen by an increase of 8.5% in April 2024 based on the increase in average earnings rather than the lower figure for price inflation.  The new weekly amount of £221 will also mean pensioners will receive nearly £900 a year more than received in 2022/23.

Business Tax

The Autumn statement announced that the turnover limits for cash basis accounting will be removed for 2024/25, resulting in unincorporated businesses of any size using the cash basis as their default method for computing profits.

The ‘full expensing’ of capital expenditure by companies on new expenditure introduced in the Spring Budget has now been made permanent.

The government will be merging the two R&D regimes (super-deduction for SMEs and RDEC) for accounting periods beginning on or after 1 April 2024. The rate of credit under the merged scheme will be at the current RDEC rate of 20%.

Other changes

Taxpayers with incomes over £150,000 whose tax is all paid under PAYE, from 2024/25 will no longer be required to file a self-assessment tax return each year.

Universal credit will increase by inflation in April 2024, which is 6.7% to September 2023.

From 1 April 2024, the National living wage will apply to those 21 or over and will rise from £10.42 per hour to £11.44.

To find out more about what the budget means for you and your business, please check out our article below.

https://treeaccountancy.co.uk/wp-content/uploads/2023/11/Autumn-Statement-2023.pdf