Autumn 2023 Budget: What Does it Mean for You?
On November 22nd, 2023 the Chancellor Jeremy Hunt announced his Autumn Financial Statement to stimulate the British Economy. In it he announced a range of ideas aiming to set out “growth measures to back British business” and “measures to make work pay”.
On first glance, the statement contained a raft of tax breaks and incentives for business people and employees. But, how do these changes affect you? At Linggard and Thomas Accountants we have tried to cut through the noise to highlight the legislation that will most directly affect our clients.
2% Decrease in Class 1 NI payments for Employees
From 6th January 2024, Class 1 National Insurances payments will drop from 12% to 10% for earnings between £12,571 and £50,271, with a continued 2% rate on earnings above this.
Mr Hunt said the National Insurance reduction would mean 27 million people classed as employees would see the benefit of this change and "means someone on the average salary of £35,000 will save over £450 a year".
NI Savings for Self-Employed Workers
The country’s nearly two million self-employed workers will also see savings in National Insurance payments in the form of Class 2 and Class 4 NI reductions.
The Class 2 NI is a flat-rate contribution for the self-employed, however starting April 2024 this will no longer be mandatory. This will save self-employed individuals earning over £12,570 a fixed weekly rate of £3.45. Despite this, they will maintain access to contributory benefits like the State Pension.
Those earning between £6,725 and £12,570 will still have access to contributory benefits via a National Insurance credit without actual payment requirements.
Individuals earning below £6,725 and those opting to pay Class 2 NI voluntarily for benefits access will continue to have this option.
There will also be a drop in Class 4 Nis, which is payable on profits of over £12,570/year. The primary rate for Class 4 NI for the self-employed will decrease from 9% to 8%, effective from 6th April 2024. The new 8% rate applies to profits ranging from £12,570 to £50,270 annually, with a 2% rate on profits exceeding £50,270.
Mr. Hunt stated that these two changes will "save around two million self-employed people an average of £350 a year from April".
Increase in the National Living Wage
The National Living Wage will rise to £11.44 in April 2024, marking an increase from the current £10.42 per hour. This applies to workers aged 21 and above.
This is good news for employees, although employers will need to factor in these extra costs to their staffing costs.
Business Rate Relief for the Retail, Leisure and Hospitality Sector
With a large proportion of businesses in Cornwall in the retail, leisure and hospitality sector, any changes to legislation here would be keenly felt in the region.
The chancellor announced 75% business rate relief for eligible Retail, Hospitality, and Leisure properties is extended into 2024-25, with a cap of £110,000 per business.
Other measures that could affect the sector, apart from the minimum wage increase mentioned above, was a freeze on alcohol duty until August 2024 – meaning no additional taxation for beer, cider, wines or spirits.
‘Full Expensing’ Scheme Continued
Another announcement in the Autumn Budget was the continuation of 'full expensing', leading to a tax reduction of 25 pence for every pound spent on qualifying equipment and machinery investments. Initially introduced as a temporary measure in the Spring Budget of 2023, this policy will continue beyond its mooted end date of April 2024.
The 'full expensing' policy grants corporation tax-paying entities the advantage of a 100% First-Year Allowance (FYA) on capital expenditures for eligible equipment and machinery.
The Chancellor packaged this as a great time for businesses to invest in new equipment and machinery due to the potential tax savings. However it is worth remembering that this scheme only applied to Limited companies, and the Annual investment allowance (AIA) is still in place to cover the first £1m of certain investment.
For our most of our clients, who trade as sole proprietors, partnerships or small limited companies, the full expensing scheme will have little impact as we move forward.
State Pension Increases
Good news for pensioners, the state pension is set to increase by 8.5% from April 2024 with Hunt honouring the commitment to the triple lock. This increase is inline with average earnings increase and will now be set at £221.20 a week – an increase of up to £17.35.
Linggard & Thomas: Empowering your Business to Succeed
Understanding the complexities of business accounting and bookkeeping can be a real challenge, especially with constantly changing financial regulations such as the Autumn Statement come into place.
Linggard & Thomas are Newquay-based accountants that can help you navigate the complex world of finances – using our up-to-date knowledge of accountancy measures to empower your business to grow.
Get in touch today to see how we can help your business succeed.