Autumn Statement highlights

Autumn Statement Highlights

iSpeech

Personal tax

Income tax rates

The basic rate will remain at 20%, the higher rate at 40% and the additional rate at 45% for 2024/25.

The point at which individuals pay the additional rate of 45% was reduced from £150,000 to £125,140 for the current tax year and this will continue for 2024/25.

Income tax allowances

The income tax personal allowance and basic rate limit are fixed at their current levels until April 2028. They are £12,570 and £37,700 respectively.

Dividends

From 6 April 2024, the rates of taxation on dividend income will remain as follows:

  • the dividend ordinary rate – 8.75%
  • the dividend upper rate – 33.75%
  • the dividend additional rate – 39.35%.

As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.

The government will reduce the Dividend Allowance from £1,000 to £500 from 6 April 2024.

Individual Savings Accounts

The government is freezing the limits on Individual Savings Accounts (ISAs) (£20,000), Junior Individual Savings Accounts (£9,000), Lifetime Individual Savings Accounts (£4,000 excluding government bonus) and Child Trust Funds (£9,000) for 2024/25.

Pensions

The annual allowance of £60k will remain for 2024/25.

Single pension pot

The Chancellor announced he will ‘consult’ on reforms to allow people to choose their own pension scheme for automatic enrolment, rather than join their employer’s default arrangement.

Under current rules, UK companies are required to set up a pension scheme for employees. Unfortunately, this means many people will build up multiple pensions throughout their career, with a growing risk those pots become ‘lost’.

The government will now launch a ‘call for evidence’ on a new pension model that would simplify the current system and allow people to have one ‘pension pot for life’. 

Employment

Employees and NICs

The government will cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024.

This means the average worker earning £35,400 will receive a tax cut of over £450 in the 2024-25 financial year.

The self-employed and NICs

Class 2 self-employed NICs will be abolished from 6 April 2024 but will continue to receive access to contributory benefits, including the State Pension.

The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.

The employment allowance continues at the current level of £5,000.

The Chancellor says these cuts combined will mean an average self-employed person on £28,200 will save £350 in 2024-25. 

National Living Wage and National Minimum Wage

The government has accepted in full the recommendations of the Low Pay Commission and announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2024.

Help with childcare

A phased package of support was previously announced for help with childcare costs for accessing 30 hours of childcare for children over nine months old. The free childcare will be available for 38 weeks of the year.

  • From April 2024, working parents of two-year-olds will be able to access 15 hours of free childcare. 
  • From September 2024, 15 hours of free childcare will be extended down to the age of nine months for working parents.
  • From September 2025, working parents of children aged nine months and upwards will be entitled to 30 hours free childcare per week right up to their child starting school. 

Business

Business Rates

The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. These changes will take effect from 1 April 2024.

Capital allowances

The new Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is unused and not second-hand. The government has announced that this will now be made permanent.

The Annual Investment Allowance, which gives a 100% write-off on certain types of plant and machinery, remains at £1 million per 12-month period.

Corporation tax rates

The government has confirmed that the rates of corporation tax will remain unchanged, which means that, from April 2024, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less.

VAT

The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively.

Making Tax Digital

The Chancellor announced a package of changes to simplify the design of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA).

This includes maintaining the current MTD threshold at £30,000 and design changes to simplify and improve the system.

These changes will take effect from April 2026.

The government is also legislating in the Autumn Finance Bill 2023 to ensure taxpayers, who join MTD from 6 April 2024, are subject to the government’s new, fairer penalty regime for the late filing of tax returns and late payment of tax.

Capital taxes

Capital gains

The capital gains tax annual exempt amount will be reduced from £6,000 to £3,000 from April 2024.

Inheritance tax

The inheritance tax nil-rate bands will stay fixed at their current levels until April 2028. The nil-rate band will continue at £325,000, and the residence nil-rate band will continue at £175,000.

Anna Goodwin @2023 All Rights Reserved.

www.annagoodwinaccountancy.co.uk

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