On Wednesday 22^nd November 2023, Chancellor Jeremy Hunt announced a raft of new policies and legislation in his Autumn Statement, as the government continues to try to grow the UK economy.

Below we have summarised some of the key points that will affect those running their own businesses along with a comprehensive breakdown on other areas that may be relevant.

Key points from the Autumn Statement:

• Employee’s national insurance main rate will be reduced from 12% to 10% from 6^th January 2024 – Whilst this won’t make a difference to many people working through their own limited company, it may, in some circumstances, mean that paying a salary could be more beneficial than the usual mix of salary and dividends. This may also mean more cash in the pockets of those that are only paid by salary, including those using an umbrella service or working on an inside IR35 contract through their Ltd company.

• Veteran’s national insurance holiday changes – Employers will continue to pay no employers national insurance on earnings up to £50,270 for a qualifying veteran’s first 12 months of civilian employment. This has been extended to April 2025.

• Class 2 national insurance abolished from April 2024 – Previously set at a flat rate of £3.45 a week, those with taxable self-employment earnings more than £6,275 will still retain their entitlements for state pensions and benefits etc. Those with earnings below £6,275 will still need to make voluntary contributions. Those with lower incomes should also consider checking their state pension record, which can be accessed via your HMRC Digital Tax Account/government gateway log in.

• Class 4 national insurance main rate reduced from 9% to 8%, starting in the 2024/25 tax year – This reduction will save the average self-employed person £350 per year.

• State pension will increase by 8.5% from £203.85 to £221.20 a week – This will come into play from April 2024.

• Full expensing for limited companies to become permanent – There will be no cap on the capital allowances you can claim for qualifying expenditure and will also continue to include a 50% first year allowance on qualifying special rate pool items (which includes most motor vehicles).

• National living wage to increase – For those 21 and over the new minimum wage will be £11.44p/h from 1^st April 2024. For those working full time, this will be worth up to £1,800 per year.

And, some other points to note:

• Employees’ pension schemes – As part of a larger reform on pensions, the government will look into measures to give employees the right to have their pension contributions made into an existing pension scheme if they choose.

• Pensions lifetime allowance to be abolished from 6^th April 2024 – The new legislation will also clarify the taxation of lump sum payments and overseas pensions.

• Business rates – The small business multiplier will be frozen for another year. The government will also extend the 75% rates discount for retail, hospitality and leisure businesses for another year.

• ISA reform – As part of a wider reform of ISAs, the government will look to increase the scope of investments that can be made in an ISA and also look to increase the flexibility of contributions, meaning you can contribute to more than one ISA of the same type in a single tax year.

• Cash basis for the self-employed – From 6^th April 2024, this will become the default method for the self-employed to record and submit their income and expenses to HMRC. The government will also remove certain restrictions that previously applied to turnover, interest and loss relief.

• Making Tax Digital (MTD) for income tax – HMRC have announced further simplification for MTD for income tax, as well as removing the requirement to file an end of period statement. Draft regulations are planned to be published for consultation before the end of 2023.

• Annual Tax on Enveloped Dwellings – The annual charge on certain residential property owned by a limited company will increase by 6.7% from 1 April 2024, in line with the September 2023 Consumer Price Index figures.

• Enterprise Investment Scheme (EIS) & Venture Capital Trust (VCT) scheme – The government has announced that the tax benefits of EIS & VCT schemes will continue for all shares issued before 6^th April 2035, rather than 6^th April 2025.

• HMRC resources to increase – The government is going to give further resources to HMRC to ensure everyone pays the right amount of tax. It is expected that this will raise an additional £5billion over the forecast period.

• Improving HMRC data through PAYE and Self-Assessment – The government will be making changes to the information submitted as part of PAYE reporting and through Self-Assessment, beginning in 2024/25. For PAYE, you will need to submit details of how many hours each employee has been paid. For Self-Assessment, there will be a new requirement to show dividends received from an owner managed business separately to dividends received from other investments – we anticipate that this may be a way for the government to assess introducing a separate tax rate for owner managed dividend income, in order to bring the tax paid in line with the tax that would have been due on an equivalent salary.

• Sentences for tax fraud to double under new legislation – The government will introduce legislation to double the maximum prison sentence for tax fraudsters from 7 years to 14. This will take effect from the date of Royal Assent of the Autumn Finance Bill 2023.

• Investment in apprenticeships – The government will invest £50million over two years to pilot ways to increase the numbers of apprentices in key growth sectors, including engineering.

• Government contracts to help small businesses – In a bid to help small businesses, the government will be introducing a new condition for companies bidding on large government contracts – they must be able to demonstrate that they pay their supplier invoices within 55 days on average, which will be reduced progressively to 30 days.

• Commitment to building new homes – The government is going to invest in nutrient mitigation schemes, as well as dealing with the backlog of building and planning applications in the system. They will also be offering financial incentives to councils in order to speed up the application process.

• Alcohol duty frozen until 1^st August 2024 – They have also confirmed the Brexit Pubs Guarantee, meaning the duty charged on a pint in the pub will ALWAYS be lower than in the shops.

The Government have shared the full Autumn Statement 2023 on their website.

If you have any questions about how the points raised in the Autumn Statement affect you, please feel free to give us a call on 0207 096 2659 or submit a question to our team of qualified accountants.