The Autumn Statement was mainly divided into two parts, those affecting individuals and small businesses/self-employed.
Individuals
Pensioners
The triple lock has remained which means that pensioners get a 8.5% increase in their pension from April 2024. This means that most of your personal allowance will be sued up, so if you also receive a private pension, more tax will be deducted from this pension and you will receive less private pension and more state pension.
You may find that your other income such as bank interest and dividends will also fall into the tax band as your state pension is using most of your personal allowance.
Employees
The amount of Class 1 National Insurance paid is being reduced from 12% to 10% with effect from 6th January 2024. So, you will receive the benefit of this reduction in your next pay packet after 6th January 2024.
If your only source of income is your employment income from April 2024, so for the 2024/2025 tax year, you are not required to do a tax return any longer (no matter your salary amount). However, if you want to claim any tax expenses or allowances, you may still want to do a tax return to ensure these are claimed and the refund paid to you.
Businesses and Self-Employed
Employers
From April 2024, the National Living Wage will be increased to £11.44 per hour and the age limit for this will be reduced to 21 onwards.
It is an employer’s obligation to pay the minimum wage amounts.
Capital allowances
Full expensing at 100% has been made permanent on qualifying plants and machinery.
Most small businesses will already benefit from the Annual Investment Allowance of a 100% capital allowance of up to £1m per annum.
Business rates
The small business rates multiplier has been frozen for another year.
Businesses in the retail, hospitality or leisure industry will be able to benefit from the 75% relief on business rates for another year.
Making Tax Digital
The extension of Making Tax Digital to those under self-assessment (the self-employed and landlords), will come in from April 2026 (unless extended again)!
The threshold for the requirement of this has been increased to £30,000 instead of £10,000.
Class 2 NIC
Class 2 NIC payment is made annually with the income tax liability. It is paid to provide full credit of national insurance points which enable you to a full state pension and other benefits.
From April 2024, Class 2 NIC will be abolished and those with profits over £6,725 will automatically receive a full year’s tax credit without having to make the Class 2 payment.
Class 4 NIC
Class 4 NIC, is basically an additional tax and it does not give you any national insurance benefits. The current rate is 9% and this will be reduced to 8% from 6th April 2024.
If you wish to find out more about how your business may be affected by the budget, listen to the podcast ‘Your Business Hour, Champ Consultants’ for more information and explanations relating to your business.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the contact us page on our website: www.champconsultants.co.uk
You can also find me on TikTok here.
Chantal Baker, is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please do follow us on the various social media channels.