Introduction
We have spent a lot of time listening to our clients’ feedback over the last few months and one recurring theme was a desire for more commentary around topics that may not necessarily be directly related to investments.
With that in mind, this will be the first in a new series of regular blogs and videos which will explore various topics which we hope you will find interesting. We have no immediate intention to halt our monthly commentary as we believe it is still very important to be able to cut through the noise and comment on what has happened and what this has meant in a simple way.
We felt it made sense to start with the Autumn Statement which was published this week. As a reminder, the Autumn Statement tends to deliver more detailed or broader government plans based on economic data from the Office for Budget Responsibility (OBR) rather than a detailed taxation plan. This tends to be held back for the Spring Budget in March. Nonetheless, there were some important points that we wanted to highlight.
It was announced that the employee National Insurance rate will drop from 12% to 10%. Rather than waiting until the new tax year, it was also announced that this change would come into effect on 6th January 2024.
For the self-employed, Class 2 National Insurance has been abolished and Class 4 rates will fall from 9% to 8%. These changes will not be brought forward though and will begin in the next tax year.
ISA Simplification
Left in the small print of the Statement was a ‘simplification’ of the ISA rules moving forward. As of next tax year, individuals can open and pay into multiple ISAs of the same type, as long as allowances are not breached. These allowances remain unchanged and remain at £20,000 for an ISA and £9,000 for a Junior ISA.
Pensions
The government announced a proposed ‘Pot for Life’. This proposal would allow an employee to move their pot from job to job. This is still a proposal at this point so we will keep an eye on how this develops.
Whilst technology and online solutions are becoming more prominent in our industry, we firmly believe that there is no substitute for face-to-face advice delivered with compassion and care and we firmly believe this will lead to a better client outcome and experience.
Business Rates
The ‘full expensing’ tax break initially offered to businesses until 2026 has now been made permanent. This allows companies to deduct the full cost of qualifying plant or machinery from their taxable profits in the year of purchase. It is equivalent to a tax saving of up to 25p for every £1 spent.
In addition to this, the small business multiplier will be frozen for another year, along with business rates relief for retail, hospitality, and leisure businesses.
Rumoured Pre-Statement
Many things were rumoured in the lead-up to this Statement which may well raise their head in future Budgets. The following were all things you may have read that did not come to fruition:
- A reduction or change to Inheritance Tax or related allowances
- Changes to any Pension Allowances
- New types of ISAs
- Plans to apply income tax to inherited pensions where the deceased passes away before the age of 75
- Changes to the ‘Triple Lock’ on State Pensions
- A reduction in the rate of income tax, nor the income tax bands (worth noting that this could be looked at during the Scottish Parliament’s Budget in December).
As always, there is significantly more detail in the Statement itself but hopefully the above highlights the key matters that will be relevant to you.
For the majority of our clients, the rumours that did not come to fruition probably have more of an impact than the matters that were announced. There was much focus on the strength of the economy and growth and inflation predictions. The government took much pleasure in announcing the Office for Budget Responsibility’s new forecasts and, with an election in the 18 months, there seems to have been an element of caution with this Statement. Should the economy continue to grow and inflation continue to drop, there is every possibility that the Spring Budget could provide more for people to get excited about.
