People meeting around table

Autumn Statement 2023

Laura Clark, Financial Planning Consultant
22/11/2023
People meeting around table
A summary of the key points

The following are the headlines we have taken from Chancellor Jeremy Hunt's announcement of 110 initiatives that may potentially raise investment into the UK by £20 billion, we will continue to absorb the full Autumn Statement.

Support for businesses and the self-employed

For businesses, the ‘full expensing’ tax break has been extended from 2026 to remain in place permanently. This allows companies who invest in new equipment such as IT and Machinery to claim back 100% of their money. This is great for certain industries such as manufacturing but less so for those who invest predominantly in people. It was described as the ‘largest tax cut in UK history’ and is set to cost £11 billion but the government feel this will attract further investment which coincides with the dubbed ‘Autumn Statement for growth’.

To help ‘simplify’ taxation for the self-employed, Class 2 National Insurance is set to be removed in full from April 2024 with Class 4, being reduced by 1% to 8%. This could be in response to the criticism received following the April budget which raised the Corporation Tax rate for businesses with profits over £250,000 from 19% to 25%.

Personal Pensions, Lifetime Allowance and State Pensions updates

The Chancellor announced to create a single pension pot for life, however, the finer mechanics around how will need to be outlined for this to become a reality, especially regarding the potential administration burden it could potentially cause employers, where historic changes in this area have typically further complicated what was already complex. This is a welcome step to increase visibility of retirement provision, overcome the legacy issue of lost pensions alongside scattered pots.

The abolition of the Lifetime Allowance (LTA) for pension savings is on schedule and official documents have confirmed it will be completed by 6 April 2024. The removal of the LTA, the maximum amount people can contribute to a pension pot without triggering tax charges, was announced in the spring Budget.

Documents released alongside the Autumn Statement speech said the government "will legislate in the Autumn Finance Bill 2023 to remove the Lifetime Allowance". The document added: "The measure will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements. This will take effect from 6 April 2024."

This feeds into the commitment to uphold the triple lock guarantee for state pensions, which will result in an 8.5% increase, worth up to £900 more a year. A further increase to the minimum wage came as a welcome addition to £11.44 per hour.

Allowances remain frozen but multiple ISA subscriptions are permitted

Frozen allowances remain unchanged which could be considered controversial especially as inflationary increases were being encouraged by headlines prior to the Budget. The ISA allowance has remained frozen at £20,000, JISAs at £9,000 and LISA’s, which are structured to help first-time buyers get on the property ladder, allowance remains low at £4,000 despite the struggle for first-time buyers.

One significant change for ISAs is to allow multiple subscriptions to ISAs of the same type every year from April 2024 up to a maximum allowance of £20,000. Currently, savers can use only one ISA in each category within a tax year.

Example:

It is not possible to mix two different stocks and shares ISAs e.g., AJ Bell and Transact, and you’re also unable to have two cash ISAs from separate banks. Savers will be able to make partial transfers of funds between providers from April 2024.

Sunset clause extended for Enterprise Investment Schemes and Venture Capital Trusts

The good news is that the Chancellor confirmed within the accompanying documentation, support for Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) through the extension of the existing sunset clause for EIS and VCTs from April 2025 to April 2035.

If there had been no extension, the 30% income tax relief available on these products (including other tax benefits) would have stopped in April 2025.

National Insurance reduction and controlling inflation

There was a bold reduction in National Insurance for employees from 12% to 10% between earnings of £12,571- £50,271 which is set to impact 27 million employed individuals from the 6 January rather than the new tax year with an accelerated piece of legislation being implemented.

There has been some yo-yoing around National Insurance rates in recent Budgets with the hike to 13.25% in April last year and then being reversed in November 2022. Despite the announced cuts, National Insurance thresholds have remained static regardless of high inflation.

Controlling inflation was set out as a priority and it has been halved from 11.1% to 4.6% with a further decrease set to 2.8% in 2024. The Chancellor was very clear that he would not take the risk with inflation, but will this forecasted decrease have a notable impact on interest rates which appear to have levelled out more recently?

Final thoughts

The cumulative impact of the tax cuts announced will total a huge £10 billion. Despite the initial rumours concerning changes to Inheritance Tax rates, it remained untouched, but we could anticipate changes in the April Budget. This tax impacted around 4% of estates between 2020 and 2021 but due to high levels of inflation it will undoubtedly start to impact more as estates (in particular properties which are illiquid) start to creep past the current thresholds.

The argument that the nation is still exposed to a ‘stealth tax’ due to stagnant allowances is considerable. With recent reductions to the Capital Gains Allowance and other static allowances, in a high inflation environment makes fiscal drag more prominent and will result in a greater number of taxpayers over time. Hunt explicitly stated he will not take any risks with inflation and the frozen allowances could be a strategy to try and avoid further inflationary demands.

There may be a focus on savers in the April Budget, with inflationary increases to allowances for tax efficient wrappers but will savers, in particular younger generations, be given that much needed help they need to form the right financial foundations. Following their commitment to the triple lock guarantee over recent years a spotlight on the other end of the generational spectrum would be refreshing.

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

Meet our Financial Planning team
Helping secure your future financial objectives.
Contact us
Let us know your enquiry and we'll be in touch.
Insert Clear Filter Text
loading gif
Transitional Tax Certificate
Following the abolishment of the lifetime allowance, you might benefit from higher levels of tax-free cash from your pension.
Your tolerance to investment risk and what it means?
How comfortable are you with investment risk? Understanding your Investment risk is important in helping you achieve your financial goals.
Crowe Corner Financial Planning
Nasiba Vaiya discusses how teams can work collaboratively to support clients and what businesses need to consider for themselves and their employees.
Net Zero – The what, the why and the how
Net Zero will start to trickle through to our investments as the underlying holdings and businesses start to focus more on sustainability.
Pensions and ISAs
In this article, we will examine the benefits of each, potential drawbacks and how both can be used effectively.
Spring Budget 2024 – What did we learn?
We take a look at the headline points from the Spring Budget and what these mean for our clients.
Retirement, are you prepared?
We provide some questions you should ask yourself to help you prepare for retirement.
Inheritance Tax: Could it impact you?
With more estates being caught by Inheritance Tax, could it impact you and what are the allowances available?
Cyber Security: Being aware and staying vigilant
With cybercriminals using increasingly sophisticated tactics, how can you stay secure? Read our key pointers around how to stay vigilant.
Pension consolidation
With a ‘one pot pension for life’ on the horizon, we look at when pension consolidation may or may not be right for you.
Tax year end housekeeping
With the tax year end rapidly approaching we provide our key points to ensure where possible you are making most of the allowances available to you.
How financial planning adds value
We look at some of the expected and unexpected outcomes from engaging with a Financial Planner through ‘structural benefits’ and ‘wellbeing benefits’.
Transitional Tax Certificate
Following the abolishment of the lifetime allowance, you might benefit from higher levels of tax-free cash from your pension.
Your tolerance to investment risk and what it means?
How comfortable are you with investment risk? Understanding your Investment risk is important in helping you achieve your financial goals.
Crowe Corner Financial Planning
Nasiba Vaiya discusses how teams can work collaboratively to support clients and what businesses need to consider for themselves and their employees.
Net Zero – The what, the why and the how
Net Zero will start to trickle through to our investments as the underlying holdings and businesses start to focus more on sustainability.
Pensions and ISAs
In this article, we will examine the benefits of each, potential drawbacks and how both can be used effectively.
Spring Budget 2024 – What did we learn?
We take a look at the headline points from the Spring Budget and what these mean for our clients.
Retirement, are you prepared?
We provide some questions you should ask yourself to help you prepare for retirement.
Inheritance Tax: Could it impact you?
With more estates being caught by Inheritance Tax, could it impact you and what are the allowances available?
Cyber Security: Being aware and staying vigilant
With cybercriminals using increasingly sophisticated tactics, how can you stay secure? Read our key pointers around how to stay vigilant.
Pension consolidation
With a ‘one pot pension for life’ on the horizon, we look at when pension consolidation may or may not be right for you.
Tax year end housekeeping
With the tax year end rapidly approaching we provide our key points to ensure where possible you are making most of the allowances available to you.
How financial planning adds value
We look at some of the expected and unexpected outcomes from engaging with a Financial Planner through ‘structural benefits’ and ‘wellbeing benefits’.