The Autumn Statement was announced on Wednesday 22nd November 2023. The Chancellor, Jeremy Hunt announced 110 measures for businesses to deliver an ‘Autumn Statement for Growth’.
The main announcements included significant reductions in National Insurance, full expensing for Companies and increases to the minimum wage.
We go through most of the taxes in the Autumn Statement 2023 below, with some tips on how to minimise the effects.
Table of contents
- Personal Taxes
- What will the Personal Allowance be in 2024/25?
- What are the Income Tax Bands for 2024/25?
- What is the Optimum Directors Salary for 2024/25 tax year?
- What is the new Employees National Insurance Rate and how much will I save?
- What are the new National Insurance Rates for Self-Employed and how much will I save?
- What Taxes are Paid on Dividends in 2024/25?
- What is the Minimum Wage from April 2024?
- What are the Changes to Capital Gains Taxes?
- Company Taxes
- Other Announcements
Personal Taxes
The main personal tax announcements in the Autumn Statement 2023 are below.
What will the Personal Allowance be in 2024/25?
Income below the personal allowance is earned tax free. The personal allowance threshold of £12,570 is to remain fixed until April 2028.
Ideally, the personal allowance would increase by inflation each year. By freezing the personal allowance more income becomes taxable. This is known as fiscal drag, which coupled with high inflation means more and more tax is payable.
The current most popular tax code is 1257L. With the personal allowance unchanged the code 1257L will remain the most common for those with only a single employment.
What are the Income Tax Bands for 2024/25?
In April 2023 the additional rate tax band was reduced from £150,000 to £125,140. The thresholds for 2024/25 will remain unchanged as follows:
- Basic rate band remains at £37,700.
- The higher rate band is charged on income over £50,270.
- The additional rate band is charged on income over £125,140.
What is the Optimum Directors Salary for 2024/25 tax year?
Based on the current announcements we expect the optimum directors salary to remain at the current amount of £12,570 per annum.
We recommend that most directors should pay themselves £1,047.50 per month.
What is the new Employees National Insurance Rate and how much will I save?
The main class 1 national insurance rate payable by employees is to reduce by 2%.
The current rate of 12% will reduce to 10% from 6th January 2024. An average worker earning £35,400 per annum will save over £450 in their pay packet. Calculate your saving below:
What are the new National Insurance Rates for Self-Employed and how much will I save?
Self-employed workers pay class 2 and class 4 national insurance contributions.
Class 2 NI is currently £3.45 a week. This will be abolished from 6th April 2024. Those with profits under £6,725 who currently pay voluntary class 2 NI will continue to be able to do so.
Class 4 NI is payable on profits between £12,570 and £50,270 at the current rate of 9%. From April 2024 this will reduce to 8%. Profits that exceed £50,270 will remain at the 2% rate. Calculate your saving below:
What Taxes are Paid on Dividends in 2024/25?
From 2024/25 the tax free dividend allowance will be £500. The allowance for the current tax year is £1,000.
The dividend allowances and rates from April 2024 will be as follows:
- The first £500 of dividend income is tax free. This is available to all taxpayers.
- Basic rate taxpayers pay dividend tax of 8.75%.
- Higher rate taxpayers pay dividend tax of 33.75%.
- Additional rate taxpayers pay dividend tax of 39.35%.
N.B Dividends held in ISAs are not subject to dividend taxes. If you are taxed on investments consider utilising your ISA allowances.
What is the Minimum Wage from April 2024?
From April 2024 the national living wage will increase by 9.8% to £11.44.
In addition, the age threshold is being reduced from 23 to 21 years of age.
There are also increases from April 2024 to the national minimum wage – £8.60 (18 to 20 yrs old), £6.40 (16 to 17 yrs old and apprentices).
What are the Changes to Capital Gains Taxes?
The capital gains tax annual exempt amount from April 2024 will be just £3,000.
This is a further reduction from the current rate of £6,000. In previous years the annual exemption was £12,300.
The capital gains tax rates remain at 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers.
Residential properties are taxed at higher rates of 18% (Basic rate) and 28% (higher and additional rate). The sale of your home is not included as it qualifies for private residence relief.
Company Taxes
The main business tax announcements in the Autumn Statement 2023 are below.
What will be the Corporation Tax Rate from April 2024?
The corporation tax rates will remain unchanged.
Companies with profits exceeding £250,000 will be taxed at the rate of 25%.
Profits under £50,000 will be taxed at the small profits rate of 19%. A marginal rate of tax is applied to profits between £50,001 and £250,000.
See how much corporation tax you will pay using our corporation tax calculator.
What is Full Expensing and will it help my Business?
Full expensing was announced in April 2023 as a temporary tax incentive to purchase new plant and machinery. This has now been made permanent.
It allows a business to claim 100% of the tax relief in the year of purchase. Previously the tax relief may have been dragged out over many years. It is only available to companies on the purchase of new assets and it excludes cars.
Small Limited companies typically claim capital allowances and the annual investment allowance. This remains in place and allows a business to claim 100% write off on certain assets up to £1 million per annum.
Unless you are spending in excess of £1 million on assets per annum your company is unlikely to benefit from full expensing.
How has the Autumn Statement 2023 helped Small Companies?
There is very little announced in the Autumn Statement 2023, which will help small companies.
Business rates relief is to continue for another year, which will be a welcome relief to many retail, offices, hospitality and leisure businesses. Expansion in freeports and investment zones may assist some.
Tax rates remain high for companies including corporation tax at 25% and no reduction in Employers NI, which remains at 13.8%. Businesses with lower paid younger employees may also suffer by the increase in minimum wage rates.
The historic tax incentive to trade as a company no longer exists. After including the NI rate reduction for the self-employed there is now very little between the two from a tax point of view. There are still many advantages of trading as a company, so we don’t anticipate businesses changing to being self-employed.
Other Announcements
The main other announcements in the Autumn Statement 2023 are below.
What are the Pension Changes?
The lifetime allowance of £1,073,100 is to be abolished from April 2024.
The annual allowance which is currently £60,000 is to remain at £60,000 for tax year 2024/25.
Has Inheritance Tax been Abolished?
Leading up to the Autumn Statement 2023 it had been rumoured that there might be changes to inheritance tax. There was even speculation that it may be abolished altogether.
It was confirmed that there are to be no changes and the current bands are expected to remain unchanged until at least April 2028. Currently the nil-rate band is £325,000 with further residence nil-rate bands available.
When is Making Tax Digital being Implemented?
The current plan is for Making Tax Digital to commence from April 2026. It will apply to self-employed individuals and landlords with income over £50,000.
From April 2027 the MTD threshold will be reduced to those businesses with income over £30,000.
What are the Changes to Government Contracts?
From April 2024 any business bidding for a Government contract over £5 million must demonstrate that they pay their suppliers within an average of 55 days. This will eventually reduce to 30 days.
Most small businesses don’t bid directly for contracts over £5 million but they may be suppliers as part of the supply chain. As a result, there could be an improved payment term, which trickles down to the smaller companies.
Further Information
For further information on the topics covered see HMRC Autumn Statement announcements.
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