On November 22, 2023, Chancellor Jeremy Hunt delivered the Autumn Statement for Growth, outlining a suite of 110 measures aimed at stimulating business growth against an increasingly optimistic economic backdrop. This statement included significant announcements regarding National Insurance changes, reforms in work-related state benefits, and adjustments to income tax and dividends.
Income Tax Adjustments
The government has confirmed the retention of existing income tax rates for 2024/25: 20% basic rate, 40% higher rate, and 45% additional rate. Notably, the threshold for the additional rate has been reduced from £150,000 to £125,140, a change initiated in the current tax year and set to continue into 2024/25. The personal allowance and basic rate limit are fixed at £12,570 and £37,700 respectively until April 2028.
Dividend Taxation
From April 6, 2024, dividend taxation rates will remain unchanged at 8.75% (ordinary rate), 33.75% (upper rate), and 39.35% (additional rate). Correspondingly, the tax on directors’ overdrawn loan accounts will also stay at 33.75%. A significant change is the reduction of the Dividend Allowance from £1,000 to £500 from April 6, 2024, impacting approximately 4.4 million individuals with an average loss of around £155.
**Individual Savings Accounts (ISAs)**
The government will maintain the limits on ISAs at £20,000, Junior ISAs at £9,000, Lifetime ISAs at £4,000 (excluding government bonus), and Child Trust Funds at £9,000 for 2024/25. However, changes will enable multiple subscriptions to ISAs of the same type every year and permit partial transfers of ISA funds between providers from April 2024.
Pension Tax Limits
The Annual Allowance (AA) remains at £60,000 for 2024/25. Individuals with a ‘threshold income’ over £200,000 will experience a reduced AA, with no Lifetime Allowance (LA) charge applied. The LA of £1,073,100 will be abolished from 2024/25, with subsequent adjustments to the taxation of lump sums and overseas pensions.
National Insurance Contributions (NICs)
A major announcement was the reduction of Class 1 employee NICs from 12% to 10% starting January 6, 2024. Additionally, Class 2 self-employed NICs will be abolished from April 6, 2024, and the main rate of Class 4 NICs will be cut from 9% to 8%.
Employer NICs Relief for Hiring Veterans
This relief has been extended for another year until April 2025, encouraging businesses to employ qualifying veterans.
National Living Wage and National Minimum Wage
From April 2024, the National Living Wage will increase to £11.44 and extend to 21 and 22 year olds. The National Minimum Wage will also see adjustments in its various categories.
Business Investment Incentives
The government aims to spur approximately £20 billion yearly business investment in a decade. Key measures include making Full Expensing permanent, reforming the UK’s planning system, pension reform, a £4.5 billion investment in strategic manufacturing sectors, and new Investment Zones.
Business Rates and Freeports
The small business multiplier freeze continues, and Retail, Hospitality, and Leisure relief is extended for 2024/25. Freeports and Investment Zones will now run for ten years.
Research and Development (R&D)
The existing RDEC and SME schemes will merge from April 2024, with a set rate of 20%. Further compliance measures are anticipated to address non-compliance issues.
Corporation Tax Rates
From April 2024, corporation tax rates will remain at 25% for profits over £250,000 and 19% for profits up to £50,000.
VAT Thresholds
The VAT registration and deregistration thresholds will remain at £85,000 and £83,000 respectively for another two years from April 1, 2024.
Capital Gains and Inheritance Tax
The capital gains tax annual exempt amount will reduce to £3,000 from April 2024, while inheritance tax nil-rate bands will remain fixed until April 2028.
Back to Work Plan
Over £2.5 billion will be invested over the next five years to support long-term unemployed individuals and those with long-term sickness or disabilities.
Making Tax Digital (MTD)
MTD for Income Tax Self Assessment will maintain the current threshold at £30,000, with design changes for simplicity and improvements set to take effect from April 2026.
These announcements reflect the government’s commitment to economic growth, business support, and fiscal responsibility. The Chancellor’s Autumn Statement for Growth signifies a pivotal moment for businesses and individuals, adapting to an evolving financial landscape.
