UNW’s summary of the key announcements from the Autumn Statement

Insight /  23 November 2023

Chancellor Jeremy Hunt had a lot more time to prepare for this Autumn Statement than for the one he delivered last year, after the brief Truss/Kwarteng spell. Perhaps that’s why he had no less than 110 measures for businesses. With his ‘Autumn Statement for Growth’, he hopes to stimulate economic growth, with those measures and with significant changes to National Insurance Contributions and reform of work-related state benefits.

The headline reductions to the rates of National Insurance Contributions for employees and the self-employed are a good way to boost employment and will be welcomed. But the Institute for Fiscal Studies has pointed out that this gives back only about a quarter of the increase in taxes due to the ongoing ‘fiscal drag’ effects of threshold freezes due to high inflation. And the thresholds remain frozen until April 2028.

Businesses will welcome that ‘Full Expensing’ of plant and machinery is being made permanent (when it was announced in March as a replacement for the capital allowances super-deduction scheme, it was to only last three years). Although described by the Chancellor as ‘the biggest business tax cut in modern British History’, the IFS considers this very misleading, as essentially it only affects (accelerates) the timing of tax relief not the actual amount of tax relief given. The Office for Budgeting Responsibility estimates that the long run annual cost will be only c £1-3 billion (much less than the additional Corporation Tax raised by increasing the rate from 19% to 25% from 1 April 2023). It is to be hoped that this will help alleviate the UK’s long standing (and related) problems of low economic growth and low productivity growth.

As usual, as well as covering the main changes announced yesterday, our summary includes some of the other measures recently announced. These include:

Personal and Employment Taxes

  • Income Tax – the rates of income tax remain unchanged at 20%/40%/45%.
  • Income Tax – the personal allowance and basic rate band are frozen until 2027/28.
  • Income Tax – the threshold at which the 45% rate of income tax starts was lowered from £150,000 to £125,140 from 6 April 2023.
  • Taxes on dividends – remain at current rates; confirmed that Dividend Allowance (reduced to £1,000 from £2000 from April 2023) falls again to £500 from April 2024.
  • National Insurance Contributions – main rate of Class 1 NICs falls by 2% from 12% to 10% from 6 January 2024.
  • National Insurance Contributions for the self-employed – main rate of Class 4 NICs falls by 1% from 9% to 8%, and Class 2 NICs abolished, both from 6 April 2024.
  • Pension tax limits – pensions Annual Allowance for 2024/25 will be £60,000; Lifetime Allowance scrapped from 2024/25 (as previously announced).

Business Tax

  • Corporation Tax – no changes to rates or limits.
  • Capital allowances – ‘Full Expensing’ (100% First Year Allowance) for main rate plant & machinery made permanent.
  • Research and Development – existing large company (RDEC) and SME schemes will be merged from 1 April 2024 (rate will be current RDEC rate of 20%).

Other taxation matters

  • Capital Gains Tax annual exempt amount (which reduced to £6,000 from £12,300 from April 2023) will fall again to £3,000 on 6 April 2024.

Other measures

  • ‘Back to Work Plan’.
  • National Living Wage and National Minimum Wage.
▶ Download our Autumn Statement Summary (PDF)

If you have any questions regarding the information covered in this summary, or would like advice on a particular area, please get in touch with either your usual contact or any of the UNW Tax partners. Contact details can be found on the final page of this summary PDF.