Much of the talk preceding the Autumn Statement was about expected tax cuts. While Chancellor Jeremy Hunt claimed his statement included “110 growth measures” the only major headline grabber was a 2% cut to the main rate of National Insurance.
NIC reduction for the Employed
Two key annual thresholds for NIC are £12,570 and £50,270 (23/24 tax year figures). Earnings below £12,570 don’t create a NIC liability. Earnings above £50,270 generate NIC at the lower rate of 2%.
It is earnings between these two thresholds which generate NIC at the main rate, currently 12%. This rate is being cut to 10% from 6 January. So, provided payroll providers can get their software updated in time, this should be reflected on people’s first payslips of 2024.
The lower 2% rate, which applies to higher earnings is not changing. Nor is the Employer’s NIC rate, which employers pay separately on salaries; this remains at 13.8%.
NIC reduction for the Self-Employed
Sole Traders and Partners in Partnerships pay two different types of NIC. The first type mirrors the NIC employees pay with a main and lower rate and the same thresholds applying. The main rate for the self-employed is currently 9% and the lower rate is also 2%.
There is also a second type. This is a flat-rate charge which works out at around £180 per tax year.
This flat rate charge is being abolished, and the main rate is being cut from 9% to 8%.
These changes to Self Employed NIC are not coming until 6 April 2024 as they have to fit within the annual tax return filing system.
Other Announcements
- Rises to State Pension of 8.5% from April 2024.
- Increase to National Minimum Wage to £11.44 from April 2024. For workers over 21 (previously applied workers over 23 only)
- Administrative changes to the ISA system – multiple subscriptions now possible.
- Extension to full expensing capital allowance scheme for companies.
- Confirmation of the merged research and development scheme for companies.
- Business rate discount (75%) for retail, hospitality and leisure extended until 2025.
If you would like more detail as to how the Autumn Statement might affect you, or your business, please contact your Relationship Partner or our Tax Manager, James May on 01482 888 820.