The Autumn Statement – getting the economy “back on track”

Jeremy Hunt’s Autumn Statement on 22 November outlined 110 growth measures intended to get more people into work, cut business taxes and raise business investment, to get the economy “back on track.” The Statement was accompanied by Office for Budget Responsibility (OBR) predictions for modest UK economic growth of 0.7% this year and 1.4% in 2025.

Contrary to speculation before the fiscal event, Inheritance Tax remained untouched, for the time being at least. There was no increase to Individual Savings Accounts (ISAs) allowances, although some changes are proposed, including the ability for people to pay into multiple ISAs of the same type each tax year and permitting partial transfers of ISA funds between providers, from April 2024.

As a reminder:
• Inheritance Tax bands remain at £325,000 nil-rate band, £175,000 residence nil-rate band, with taper starting at £2m – fixed at these levels until April 2028
• The 2024/25 tax year ISA allowance remains at £20,000 and the JISA (Junior Individual Savings Account) allowance remains at £9,000.

Key business and personal taxation measures
The headline business-related measure was to make the full expensing tax break for businesses permanent, while the key personal taxation measure was a reduction in the main rate of Class 1 employee National Insurance contributions (NICs) from 12% to 10%. It’s estimated that this will be a tax cut for 27 million working people which will take effect from 6 January 2024. The self-employed benefited by the removal of Class 2 NICs paid by those earning more than £12,570; Class 4 NICs paid on profits between £12,570 and £50,270, are to be cut by 1 percentage point to 8% from April 2024.

Pensions news
The government’s commitment to the pensions Triple Lock was honoured, meaning that the basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with average earnings growth of 8.5% (September 2023). The value of the new State Pension will increase in April 2024 from £203.85 per week to £221.20 per week, while the basic State Pension will rise from £156.20 to £169.50 per week.

Also on the pension front, the latest steps to deliver the Mansion House Reforms include a call for evidence on allowing individuals to consolidate pensions by having one pension pot for life.

The Lifetime Allowance (LTA) is still scheduled to be abolished from April 2024.

 

Extensions
A further growth measure addressed the future of Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EISs). The measure extended the operation of the EIS and VCT scheme from April 2025 to April 2035, continuing the availability of Income Tax and Capital Gains Tax reliefs for investors in qualifying companies and VCTs.

Taking sensible tax steps
It’s important to ensure you are in the best place possible when it comes to tax planning, your investments and pensions. Sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.