How will the Autumn Statement affect you?

On 22nd November, Chancellor Jeremy Hunt delivered a tax cutting Autumn Statement. Despite rumours of a lacklustre statement the Chancellor said public finances allowed him to help individuals, with cuts to National Insurance Contributions and a boost to the state pension.  

Below is a summary of what was set out during the budget:

Class one National Insurance is slashed by two percentage points to 10%

From January 6th any class one National Insurance Contributions (NIC) which are paid at 12% (earnings between £12,570 and £50,270 per annum) will be cut down to 10%. For example, if you receive a gross annual salary of £30,000 this reduction in NIC will increase your take home pay by £29.04 per month.

Class two National Contributions are abolished and Class 4 NIC’s are dropped by a 1%.

If you are self employed and earn above the Small Profits Threshold of £6,725 you must pay a fixed amount of £3.45 per week. From the new financial year, this will be abolished. Currently, those who are self-employed also pay 9% class 4 NIC’s on profits between £12,570 and £50,270. From April 2024 this will reduce to 8%, however, any profits above £50,270 will remain to be paid at 2%.

Investments

ISAs will be overhauled to enable savers to pay into multiple accounts of the same type (e.g. two cash ISAs or two Stocks & Shares ISAs) from next April. The current £20,000 tax-free allowance will remain unchanged.

The government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses for the Enterprise Investment Scheme (EIS), Small Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT) from 6th April 2025 to 6th April 2035. This is good news for those investing in EIS, SEIS and VCTs as the 30% income tax relief will continue to apply until the reformed date.

Pensions

The Chancellor has unveiled a shake up to the pension system which aims to give workers greater control over where they build their retirement pot. Savers are now being given the legal right to ask their employer to pay into a retirement fund of their choice under the changes. By doing this, he feels there will be less pension pots of lesser fund value which become harder to track down later in life, making it easier to have all of your retirement consolidated under one arrangement.

Regarding the state pension, Hunt confirmed that the government would put through an 8.50% rise to the state pension, which appeased those worrying over the ‘triple lock’.

Should you wish to discuss anything regarding the Autumn Statement, please contact us.