The Chancellor's Autumn Statement - November 2023
November 22, 2023
Richard Thomson-Curtis

Theoretically, the Autumn Statement provides an update on the government’s economic plans, and isn’t usually the place for a swathe of tax reforms - that usually being saved for the Budget in spring.

Where any tax reforms do take place, these are very rarely rabbits that are pulled out of the Chancellor’s hat, as many announcements have been briefed to the press lobby in the week leading up to the Autumn Statement (as we saw with the National Living Wage announcement yesterday, and the Inheritance Tax and Income Tax rumours over the weekend).

Speaking for around an hour (so well short of William Gladstone’s nearly 5 hour epic) the Chancellor took advantage of a slightly more positive outlook from the Office of Budget Responsibility to announce a number of giveaways in the form of full business capital expensing, NIC cuts and welfare reform to “promote effort and work”. A statement focussed on the supply side of the economy meant relatively few personal tax announcements, with much of the focus being on corporate taxes to encourage investment.

Personal Taxes

National Insurance Contributions (“NICs”) are to be slightly reformed for both employed and self-employed workers to “reform and simplify taxes”:

- For the self-employed, Class 2 NICs (currently £3.45 per week) are to be abolished from April 2024, with the main rate of Class 4 NICs being reduced from 9% to 8%.

- For employees, the main rate of Class 1 NICs is to be reduced from 12% to 10% from January 2024.

It should be noted that Scottish income tax payers may continue to have a higher combined rate than other UK residents, due to the existing divergence in rates set by the Scottish parliament.

Further to the announcement earlier in the year, the Autumn Finance Bill will remove the Lifetime Allowance for pension purposes, and will include further clarification on the taxation of lump sum and lump sum death benefit payments (which are likely to be made by reference to the current lifetime allowance).

Although widely rumoured over the weekend, there were no changes to income tax thresholds which, for now, are fixed until April 2028. Likewise, there were some changes to ISAs, including to allow multiple subscriptions, however the overall subscription limit, and limit for house value for Lifetime ISAs remains unchanged. There were also to be no changes to CGT at this stage.

Away from taxation, it was announced that the UK state pension will be increased by 8.5% from April 2024, and yesterday’s announcement of the National Living Wage being increased to £11.44 per hour was confirmed by the Chancellor.

Finally, Making Tax Digital for Income Tax Self Assessment purposes has recently been subject to a review, and suggested changes will be implemented from April 2026 to simplify the design, whilst for individuals with only PAYE income, the requirement to file a tax return will be removed for the year ending 5 April 2025.

Corporate Taxes

Further to the announcement in the Spring Budget of full expensing under the capital allowances regime to March 2026, the Chancellor announced that full capital expensing would now be made permanent, allowing for companies to benefit from a 100% first year tax deduction for expenditure incurred on qualifying plant and machinery.

The retail, hospitality and leisure sectors will, where eligible, continue to benefit from the 75% deduction in business rates for another year, and the small business multiplier for business rates purposes will also be frozen for another year. The Chancellor was keen to emphasise his support for small businesses and the retail and hospitality sectors, and hopes that these measures will encourage further investment. 

On the same theme as encouraging investment, and making the tax system simpler, it was announced that the existing Research & Development Expenditure and SME R&D schemes will be merged for accounting periods commencing on or after 1 April 2024.

Other Announcements

Continuing on his ‘supply side’ measures, the Chancellor focussed on growing the workforce, with a push to increase the number of apprentices in the engineering sector, as well as announcing the aim for the UK to become an AI powerhouse, through the investment of £500m into developing the sector.

Finally, HMRC are also to be provided with further funding, however this appears to be focussed on increasing debt collection, rather than in addressing HMRC’s poor service levels as of late.

Closing Thoughts

So whilst it was not the most exciting set of announcements for us, it potentially sets the stage for further tax cuts in the Spring as we get closer to the General Election.

Despite rumours circling over the weekend, it transpired that neither Inheritance Tax, Capital Gains Tax nor Income Tax were on the block today, but I think we can expect some announcements on all of these some time next year.

Please get in touch with one of the Sanctoras team if you have any questions about the Chancellor’s Autumn Statement, or how any of the announcements may affect you.

The Chancellor's Autumn Statement - November 2023