On 22 November, UK Chancellor Jeremy Hunt unveiled the Autumn Statement 2023, which placed a strong emphasis on stimulating economic growth through a series of strategic measures. These initiatives include removing bureaucratic obstacles in planning, facilitating quicker access to the national grid, providing support to entrepreneurs seeking capital, fostering the growth of rapidly expanding industries, attracting foreign direct investment, boosting productivity, implementing welfare reforms, ensuring equitable distribution of opportunities throughout the country, and reducing business taxes. While the Statement was relatively modest in terms of new announcements concerning employment and pensions, it did encompass a few key changes that merit attention
Abolition of Pensions Lifetime Allowance
In a significant move for pension savers, the government confirmed the abolition of the pensions lifetime allowance. This follows the initial announcement in the Spring Budget 2023. The Autumn Finance Bill 2023 will introduce legislation to remove the lifetime allowance charge, effective from 6 April 2024. This change will potentially allow individuals to save more into their pensions without incurring additional taxes, possibly encouraging more substantial pension contributions.
IR35 – Adjustments in PAYE Liabilities
Addressing the complexities of the IR35 regime, the government announced changes to how deemed employers under IR35 can calculate PAYE liabilities in cases of non-compliance. Effective from 6 April 2024, these employers will be able to reduce their PAYE liabilities by accounting for tax and national insurance already paid by a worker and their intermediary. This adjustment is a response to the challenges businesses face in assessing the tax employment status of individuals under IR35.
Reduction in National Insurance Contributions
A widely anticipated change is the reduction in the primary/employee Class 1 National Insurance Contributions. From 6 January 2024, the main rate will decrease by 2%, from 12% to 10%. This reduction is a welcome relief for employees, especially considering the higher rate of 13.25% in the previous tax year.
For the self-employed, Class 2 National Insurance Contributions will be abolished, and the main rate of Class 4 contributions will be reduced by 1%, from 9% to 8%, effective from 6 April 2024. These changes are designed to reduce the tax burden on the self-employed, offering them more financial flexibility.
Enterprise Management Incentives (EMI) Extension
The government will also legislate changes to the Enterprise Management Incentives (EMI). The deadline for companies to notify HMRC of the grant of an EMI option will be extended. From 6 April 2024, companies will have until 6 July following the end of the tax year, rather than the current 92 days following the grant of the option. This extension provides more flexibility for companies in managing their EMI schemes.
Conclusion
The Autumn Statement 2023 brings about focused changes aimed at simplifying pension savings, clarifying aspects of the IR35 regime, reducing National Insurance Contributions for employees and the self-employed, and extending EMI deadlines. While not extensive, these adjustments are significant, reflecting the government’s commitment to supporting employment and providing incentives for both employees and employers. Individuals and businesses should consult with our Rooks Rider Solicitors Employment, Wealth Planning, and Corporate professionals to understand the full impact of these changes on their financial planning and operations.
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