What does Jeremy Hunt's Autumn Statement mean for you as an individual or business owner?
These are the headlines based on the speech given by the Chancellor – as always there is detail that is published in bulk afterwards which can include changes not mentioned in the speech.
National insurance reduction
Self-employed
Class 2 NIC is being abolished altogether! – this won’t impact access to entitlements to state benefits such as the state pension qualifying years.
Class 4 is being cut by 1% to 8% on all earnings between £12,570 and £50,270 from April 2024.
These two changes will save around two million self-employed people and average of £350 a year from April 2024.
Employed
This is currently 12% on earnings from £12,570 to £50,2700 per annum.
This is now reducing to 10% -this will help 27 Million people – This means an average worker on a £35,400 salary will save £450 per year.
Urgent legislation is being completed to bring it in from Jan 6th 2024 instead of waiting for the new tax year.
This goes some way to cover the cost of freezing the tax thresholds.
National Living Wage and apprentice rate changes
The national living wage will rise by 9.8% to £11.44 an hour in April. Worth up to £1,800 for a full-time worker
The rate is currently £10.42 for workers aged over 23, but the new figure will apply to 21 and 22-year-olds for the first time.
Not mentioned in his statement in parliament, national minimum wage for 18 to 20-year-olds will also increase by £1.11 to £8.60 per hour.
Apprentices will have their minimum hourly rates boosted, with an 18-year-old in an industry like construction seeing their minimum hourly pay increase by over 20 per cent, going from £5.28 to £6.40 an hour.
State pension to increase
The Chancellor is sticking to the triple lock that ensures pensions rise by the highest out of inflation, average earnings or 2.5%.
This rise gives a rise in the state pension from £203.85 to £221.20 a week so, an additional £902 a year.
This is one of the largest ever cash increases to the state pension.
Benefits to rise 6.7%
To those on universal credit and other benefits
Mr Hunt had considered increasing benefits by the lower October inflation figure of 4.6 per cent, rather than the September number usually used.
However, he has opted to stick with convention and push for more people to re-enter the workplace by reforming the eligibility criteria.
Welfare recipients who do not get a job within 18 months will have to do work experience - those who don't look for work for a six-month period will have benefits stopped. This will not apply to those with disabilities or children.
Housing allowance rates will be unfrozen, and increased, to help with growing rental costs.
Local housing allowance helps people on benefits pay their rent to a private landlord. It has been frozen since 2020 despite rents rising sharply. This will give 1.6 million households an average of £800 of support next year.
Making 'full expensing' permanent – business tax break
Businesses have been benefiting from rules that mean they can claim back tax on investment in plant and machinery.
That was due to end in 2026, but Jeremy Hunt has now made it permanent.
It's a big benefit for companies which invest heavily in equipment, such as manufacturers.
But companies which aren't profitable, or which mainly invest in people and equipment, won't benefit as much.
Future pension consultation
He announced a consultation to give savers a legal right to require a new employer to pay pension contributions into their existing pension so that they have just one pot – this is good news but could come with an admin burden for business.
We require them to speed up the pensions dashboard creation so that if people have multiple pensions they can find them easily.
Alcohol and tobacco duty
He is increasing rates on hand rolling tobacco duty, by an additional 10% above the tobacco escalator, but freezing all alcohol duty until August 1st 2024.
