This week, Jeremy Hunt, the Chancellor of the Exchequer, unveiled his Autumn Statement. Exploring the government’s spending and taxation plans for the year ahead, here’s what the key points mean for you.
If you own a business
A new and simplified tax relief scheme for research and development will combine the existing SME and R&D Expenditure Credit (RDEC) schemes. Alongside merging those schemes, the Chancellor announced he will also reduce the rate at which loss-making companies are taxed from 25% to 19%. By simplifying the system and providing greater support, the government hopes to drive UK innovation.
The full expensing scheme will be made permanent rather than expiring in 2026 as originally planned. This scheme allows firms to write off the entire cost of spending on qualifying capital equipment such as new machinery, computers, and software while saving 25p from every £1 spent on other types of investment. This means 100% of qualifying expenditure made by companies will continue to be fully deductible from taxable profit. This was undoubtedly a welcome announcement for businesses, especially following the decision to continue the main rate of corporation tax at 25%.
If you’re self-employed
The Chancellor announced reforms to the way the self-employed pay national insurance. This will mean that approximately 2 million people will save an average of £350 per year. This includes the abolition of Class 2 National Insurance, which saves £192 a year for the self-employed. Class 4 National Insurance will be reduced from 9% to 8% on earnings between £12,570 and £50,270.
If you’re employed
The headline rate of National Insurance for employees is being reduced from 12% to 10%, benefitting approximately 27 million workers. This cut will be effective from 6 January 2024.
The minimum wage will rise to £11.44 per hour from April 2024, an increase of £1.02 from the current rate of £10.42. For the first time, the rate will apply to all those aged over 21. For those aged 18 to 20, they will receive at least £8.60 an hour from April 2024, an increase of £1.11. For those 16 and 17, and apprentices, the minimum pay will be £6.40, a rise of £1.12.
For your pension
State pension payments will rise by 8.5% to £221.20 a week, an increase of an extra £900 a year. This decision sees the triple lock honoured in full.
The Chancellor also announced plans to initiate a pension “pot for life” scheme. This will give workers the option to nominate the fund their employer pays into. This can follow them as they move throughout their working life.
For your savings
Savers are now able to open multiple ISA accounts per year, rather than being limited to just one. You’ll also be able to partially transfer money from one account to another. It is hoped that this new policy will ignite competition between ISA providers and boost interest rates.
For the economy
The overarching goal of all policies put in place this Autumn Statement is to continue driving a growing economy, a goal the Office for Budget Responsibility (OBR) believe the Government may achieve.
The OBR predicts headline inflation will fall to 2.8% by the end of 2024, reducing to the Government’s 2% target by 2025. The OBR predicts UK growth of 0.6% in 2023, with economic growth of 0.7% forecast in 2024, doubling to 1.4% in 2025.
After this weeks’ announcement, it’s clear change is on the horizon. There’s never been a better time to review your current finances with an accountant or financial consultant to ensure you’re still on track to meet your financial goals. Our expert team are on hand to support you. Get in touch today to discuss how to make your money work harder for you.
To read the Autumn Statement in full, visit the Government website here.