Jeremey Hunt, the Chancellor of the Exchequer delivered his Autumn Statement today, the 22nd November 2023, calling it “the Autumn Statement for Growth with 110 measures to help achieve this, for a country that has turned a corner”.
Set out below are a selection of the points that were covered today and what they might mean for you…
Inflation
It was announced in the Spring budget that the UK will not enter recession this year, with inflation going from 10.7% in November 2022 to 2.9% by the end of 2023. We have indeed avoided a recession, but the reduction in inflation predicted was not achieved. The inflation rate was at 11.1% in October 2022, and it had fallen to 4.6% by October 2023. So, while it has more than halved, it hasn’t quite reached the ambitious levels set out in the Spring. It’s now predicted that inflation will be at 2.8% by the end of 2024 and down further to 2% by 2025. Off the back of this, we shouldn’t expect interest rates to fall very quickly.
National Insurance for Employees
Jeremy Hunt announced that national insurance for employees will not be cut by 1%, but by 2%, taking it from 12% on income over £12,570 down to 10%. This will be brought into effect from the 6th January 2024, saving £450.00 for those earning a salary of £35,000.
National Insurance for Self-Employed
Jeremy Hunt comments on backing British businesses, applauding the self-employed for their dedication and contribution during the pandemic, (not limited to) our delivery drivers, farmers and plumbers. In recognition of this, he has announced that from April 2024 the Class 2 NIC flat rate of £3.45 per week will be abolished going forward, with access and entitlement to state pension still being available. In addition, self-employed people who pay Class 4 National Insurance at 9% on all earnings between £12,570 and £50,270 will see that cut by 1% to 8% from April 2024.
Minimum Wage
The National Living Wage, formally known as the minimum wage was at only £5.80 per hour back in 2010. It was up to £10.42 per hour in 2023, and from April 2024 the National Living Wage will be increased to £11.44 per hour, the largest ever cash increase. Workers aged 21 and 22 years old will be included in this top rate for the first time.
IR35
The calculation of PAYE liability in cases of IR35 non-compliance is set to be legislated to remove the issue of “double taxation”. HMRC will have the power to reduce the PAYE liability of a deemed employer, considering taxes paid by a worker and their intermediary in case of errors in applying the off-payroll rules.
IR35 was raised by Sir John Redwood, stating that we have lost 800,000 self-employed contractors since February 2020 and requests that the Chancellor looks at this again. Jeremy Hunt gave a fleeting and bland response of “we took decision partly due to concerns over avoidance, happy to look at that again.”
Pensions
Jeremey Hunt stated that from April 2024 the government will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year, in line with September’s high inflation rate figure, rather than the lower figure in October.
Discussing pension reforms, the Chancellor confirms he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension". This could help unlock an "extra £1,000 a year in retirement for an average earner saving from 18".
Benefits and Back to Work
Benefits will increase next year by 6.7%, the inflation rate for September. This applies to working-age benefits such as means-tested benefits such as Universal Credit, and disability benefits. But welfare recipients will be made to undertake a mandatory work placement if they are still looking for a job after 18 months of intense support, failure to fulfil the requirement will lead to their benefits being stopped.
Alcohol Duty
From the Spring Budget Jeremy Hunt confirmed that the beer and draught products in pubs will be 11p cheaper than in supermarkets, calling the relief the “Brexit Pubs Guarantee”. The draught relief will increase from 5% to 9.2% for beer and cider and from 20% to 23% for wine and spirits. He has confirmed in the Autumn Statement he freezes all alcohol duty until 1 August next year.
If you have any questions off the back of the Autumn Statement and how this might affect you or your business, please contact one of our expert accountants on 01296 468 185.