Autumn Budget 2023

by | Nov 24, 2023 | 0 comments

Autumn Budget News: 22/11/2023

The Chancellor made his Autumn Statement on 22nd November this week. As normal there have been lots of rumours on what it may include. However, in a break from recent statements, some of those rumours seem to have been wide of the mark and the Chancellor even managed to save a few surprises until his actual announcement.  The headline announcements are:

  • Taxation and Wages
    • Minimum Wage – Will increase by 9.79% from April 2024 from £10.42 to £11.44 per hour. Additionally, 21 and 22-year-olds will also now be on this top level. This represents a 12.38% increase for workers in this age band.
    • National Insurance Savings
      • Employees: From 6 January employees national insurance will drop from 12% to 10%. Earnings between £12,570 and £50,270 per year will benefit from this 2% saving.
      • Self Employed:
      • Class 2 National Insurance is a fixed rate (2023/24 £179.40 per year) that self-employed people pay if their profits are over £12,570. This will be abolished from April 2024. Some, with low profits, choose to pay this voluntarily to ensure that pension and benefit rights accrue. We understand that this will still be an option.
      • Class 4 National Insurance is currently 9% for self employed earnings between £12,570 and 50,270. From April 2024 this will be reduced to 8%.
    • Benefits and Pensions
      • Universal Credit and other working age benefits to increase by 6.7% from April 2024, in line with the September inflation rate.
      • State Pension payments to increase by 8.5% from April 2024, in line with average earnings (highest indicator in triple lock conditions).
      • Local Housing Allowances (Housing Benefit maximums) to be unfrozen.
      • Various measures to look to get the long term unemployed and those with health conditions back to work.
    • Business
      • ‘Full Expensing’ tax break to be extended permanently for Limited Companies. Annual Investment Allowance still available for all businesses whether they are a company or not. Both mean that spending on new equipment can be offset against taxable profits.
      • 75% business rates reduction for retail, hospitality and leisure firms extended for another year.
    • Other measures
      • All alcohol duty frozen until August 2024.
      • Collecting Tax Debt – It was announced that the Government will invest a further £163 million to enhance HMRC’s ability to manage tax debts. As of 30 September HMRC was owed around £45.5 billion in unpaid taxes. Late payment interest currently stands at 7.75%.
      • Pension ‘Pot for life’ consultation – Employers currently chose a pension provider for auto enrolment schemes. The Chancellor outlined a plan to consult on moving to employees choosing their own ‘pot for life’.

    Smarter Opinion
    This was a budget that shows all the signs of a party knowing that it has an election coming up in just over a year. The actual financial performance of the Government coffers has shown an upside and inflation has just come down to hit the initial target set of halving it. In this announcement the Chancellor seems to have chucked his money around to create the big headlines.

    Whilst the measures announced produced those big headlines, such as National Insurance cuts, Pensions and Benefits going up by levels far higher than current inflation etc., it is difficult to see the reality being as rosy for a good proportion of our Smarter clients. What the statement didn’t do is re-introduce things like increases to personal allowances which have been frozen for a few years now and are set to remain frozen until April 2028, measures which would give support to majority of the tax paying public.

    The statement also promoted itself as a business incentive budget. In reality, it continued the theme of side-lining the small owner-managed Limited companies. This group of businesses saw minimal support through the pandemic and have faced some of the biggest tax rises in the last couple years, but see little to no support in today’s announcement, despite the support for workers and the self-employed.

    Similarly, small employers, which may also fall into the above group, may feel hard done by, with above-inflation minimum wage rises yet no reduction to the Employers NI percentage. This can only further squeeze small businesses.

    It really does feel like a time for the taxes of this country to be reviewed more widely to produce a tax landscape that is fairer and can ensure support from the tax paying public. Constant tinkering creates political headlines, but it certainly does not help with a cohesive and fair tax landscape.

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