Autumn Statement – Snap Reaction | HK Wealth

Taxes

• Employee National Insurance to be cut from 12% to 10% from January 6th 2024.

• Class 2 National Insurance charge for self-employed people earning more than £12,570 to be abolished from April 2024.

• Main rate of Class 4 self-employed National Insurance Contributions to be cut from 9% to 8% from April 2024.

• No change to Income or Inheritance Tax rates.

Pensions and savings

• Government to open consultation on pension pot reforms, so savers have a legal right to require a new employer to pay pension contributions into their existing pension. Employers should note that this would take some considerable time to implement due to the practical problems this presents.

• The flat rate state pension will increase by 8.5% from £203.85 to £221.20 a week from April 2024. The maximum paid to those who reached state pension age before April 6th 2016 is currently £156.20 a week, increasing to £169.50 a week.

• Pensions triple lock to be maintained.

• ISA limits frozen, but ISA rules to become more flexible. We will provide more detail on this in our full report.

• The Lifetime Allowance remains on track to be abolished in April 2024, via legislation in the Autumn Finance Bill 2023.

Living costs

• Up to £10,000 off electricity bills over 10 years for those living closest to new energy infrastructure.

• Duty rates on all tobacco products will increase by 2%, and duty on hand-rolling tobacco will go up by 12%.

• Alcohol duty to be frozen until August 2024.

Businesses

• Tax break allowing businesses to deduct the full cost of investing in machinery and equipment from their tax bill is now permanent.

• Tougher regulation on late payers to improve prompt payments to SMEs to be introduced.

• 75% discount on business rates for retail, hospitality and leisure firms extended for another year.

• New rules to encourage local authorities to fast-track major business planning applications.

• £500m to be invested in schemes to make the UK an “AI powerhouse”.

• Reforms to R&D tax reliefs to simplify and improve the system, which will combine the existing R&D Expenditure Credit and SME schemes.

Economy

• The OBR forecasts inflation will fall to 2.8% by the end of 2024, and reach the Bank of England’s 2% target in 2025.

• OBR predicts economic growth of 0.6% in 2023. This is higher than its earlier estimate of a 0.2% contraction.

• OBR has downgraded its growth forecasts for the next two years. The organisation expects growth of 0.7% in 2024, down from its earlier prediction of 1.8%. This will be followed by 1.4% growth in 2025, which is lower than its previous forecast of 2.5%.