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The Autumn Statement 2023

The Chancellor delivered his Autumn Statement this week with measures focused on stimulating growth in the economy.

The Autumn Statement 2023

Gemma Wass

Gemma Wass

The Chancellor delivered his Autumn Statement this week with measures focused on stimulating growth in the economy. These included; reducing National Insurance and confirming the triple lock on State Pensions will be maintained.

Here are our highlights from this week’s statement:

National Insurance Reductions

Reducing rates of National Insurance for the employed and self-employed will provide a tax saving for individuals, which the government hope will help stimulate economic growth.

For employees:

The main rate of National Insurance (Class 1) will be cut by 2% from 6 January 2024. The new rate of 10% will apply to earnings between the primary earnings threshold (£242 per week) and the upper earnings limit (£967 per week), giving a maximum saving of £754 per year.

For the self-employed:

Class 2 National Insurance will be abolished from April 2024 for those with annual profits exceeding £6,725, this will be a saving of £3.45 per week. And those affected will still get access to contributory benefits, including the State Pension.

Those with earnings below £6,725 must still pay voluntary Class 2 contributions at a rate of £3.45 per week if they wish to retain access to the State Pension and other benefits.

In addition to Class 2, self-employed individuals also pay Class 4 National Insurance contributions on profits between the lower profits limit (£12,570) and upper profits limit (£50,270). From April, the rate will fall by 1% to 8%, representing annual savings of up to £377.

State Pension

It was confirmed that the ‘triple lock’ would be maintained, and as a result the State Pension will be increasing by 8.5% next April. The ‘triple lock’ guarantees the State Pension will be boosted by either September’s inflation, earnings growth (from the period between May to July), or 2.5%, whichever is highest.

This means that the full New State Pension will increase to £221.20 a week from April 2024. That’s £11,502.40 per year.

This increase will go someway in helping retirees keep up with the ever increasing cost of living.

ISA Changes

Sadly the ISA subscription limits will not be increasing and will remain at £20,000 for adult ISAs and £9,000 for Junior ISAs.

However, the Chancellor did announce the ‘one ISA of each type per tax year’ restriction will be removed from April 2024. This means that investors will be able to subscribe to multiple cash or stocks and shares ISAs in a year, without fear of invalidating their subscriptions, leading to a loss of tax free status on their savings.

Inheritance Tax

In the lead up to the Autumn Statement there was much speculation that inheritance tax might be either abolished or the rate reduced, however the Chancellor has decided not to make any changes at this time. The nil rate band (the threshold above which inheritance tax is payable) will remain frozen at £325,000 and £175,000 for the residence nil rate band.

If you would like to explore any areas of the Autumn Statement further, please don’t hesitate to contact us and one of our Financial Planners will be happy to help.

Important notice:

This article has been based on our understanding of the new rules as we understand them at time of publishing and could be subject to change.

This article should not be taken as advice.

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