What does the Autumn Statement mean for me?
Announced on 22nd November, the Autumn Statement was the Government’s opportunity to provide insights into the UK’s current economic position and provide a roadmap for the next few months, particularly as we head towards a UK General Election. The general assessment was that the economy has improved and demonstrated a degree of resilience but that inflationary pressure caused by global geopolitical and supply chain issues have impacted the UK to a greater extent than originally envisaged. The Chancellor does however feel that an opportunity has presented itself now to support individuals who have suffered most during the recent ‘cost of living crisis’. The most notable announcements which could affect you are as follows:
If you are employed:
2% cut in national Insurance from 12% to 10%. Of most interest is the fact that this comes into effect from 6th January 2024. A hard-working family with 2 earners on the average earnings of £35,404 will be £900 better off.
If you have moved between jobs the Government is working on having one ‘pension pot for life’. For employees (and IFA’s) this could make life a lot easier.
If you are self-employed
The Self-Employed flat rate Class 2 National Insurance contributions of £3.45 per week has been abolished, a saving of £179.40 a year.
Class 4 National Insurance contributions on profits will reduce from 9% to 8%. Based on self-employed profits of £28,200 this is a saving of £350.
If you are a business owner
You don’t have long to update your systems to take into account the cut in National Insurance contributions.
With the introduction of the ‘pension pot for life’ you will need to be prepared that at some point in the future you could be paying pension contributions to a different pension provider for each employee. This seems to contradict the rules on setting up a workplace pension for all staff and could increase administration costs significantly. More details will be unveiled, and it will be interesting to see how the industry reacts.
No changes to Dividend tax allowances, rates or Entrepreneurs relief.
No changes to Corporation tax.
If you are retired
The State Pension will rise by 8.5% from April to £221.20 per week. This makes the full State Pension £11,502.40. For most this means paying more tax on other pensions and income. You will see your tax codes adjusted accordingly and more tax being deducted from other pensions you receive.
If you have savings
There is no change to dividend tax rates, capital gains tax or the savings rates and allowances.
You will, however, be able to have more than 1 of each type of ISA from April. Until now you could have 1 Cash ISA and 1 Stocks and Shares ISA. From April you will be able to hold multiple ISAs, as long as the total does not exceed £20,000. In reality this means you need to take a great deal of care in making sure that you do not exceed the total, by keeping records of where and when you make payments into an ISA.
Of course there are several other policies and changes being investigated which could impact us all, but we await further details. If you would like to discuss this in more detail, and look at how this could impact you in the longer term, please do get in touch.
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