Working together to keep the complicated simple

The 2023 Autumn Budget and what it means for contractors?

The leaves are falling, the temperature’s dropping, and the nights are drawing in. It can only mean one thing… the Autumn Statement has arrived!

Yes, the Chancellor stood outside Downing Street yesterday, held up his red despatch box, and then set out some key fiscal policies from the government.

What does this mean for contractors? Well, not a lot. However, we’re here to outline some of the main talking points.

National Insurance

Tax cuts were expected in the run-up to the Autumn Statement, and Mr Hunt announced several changes to National Insurance (NI) to prove the rumours true:

  • For employees, the main rate of NI (payable on earnings between £1,048 and £4,189 per month) is due to fall from 12% to 10% from 06 January 2024. A mid-tax year change that will surely delight payroll software providers.
  • For the self-employed, the rate of ‘Class 4’ NI (payable on annual profits between £12,570 and £50,270) will fall from 9% to 8% with effect from 06 April 2024.
  • Also of interest to those self-employed taxpayers will be the abolition of ‘Class 2’ NI. Currently payable at a weekly rate of £3.45, those affected can expect to make an annual saving of close to £180.

If you’re an existing Maslins client with your own limited company, then the above will almost definitely be of zero relevance to you. Not being classed as self-employed for NI purposes, nor taking enough salary (in line with our general recommendations, here) to trigger employee NICs. Both mean that the measures introduced won’t impact you in any way.

Pensions

Another interesting point to come out of yesterday’s announcements came in the shape of pension reform.

The Chancellor announced his plans to consult on a ‘pot for life’ pension scheme, which would give employees the legal right to require a new employer to pay pension contributions into their existing pension.

In theory at least, any such reform should generally be welcomed, especially by savers.

However, experts are already sceptical about the reality of how introducing these measures would work, and the administrative burden it might place on employees/employers.

Reading between the lines: don’t expect to hear too much further any time soon on this.

Unsure of how to best use your pension? Read our recent blog post where we outline Pensions and the Annual Allowance.

Full Expensing

In the Spring Budget, the government introduced ‘full expensing’ for companies investing in equipment up to 31 March 2026. In the Autumn Statement, this measure was made permanent.

Once again if you’re a Maslins client, then the above shouldn’t impact you. Any capital purchase that your company makes is likely to already qualify for the maximum amount of tax relief available (regardless of this announcement).

Anything else?

Other key announcements included:

  • Inflation – anticipated that this will fall to 2.8% (currently 4.7%) by the end of 2024, before meeting the Bank of England’s target 2% rate during 2025.
  • State Pension – from April 2024, state pension payments will increase by 8.5% (in line with average earnings), as the government remains committed to the ‘triple lock’.
  • Alcohol & Tobacco – all alcohol duty is being frozen until August 2024, whereas all tobacco products are seeing duty rates increase above the rate of inflation. Whilst drinking enthusiasts may be pleased, the same can’t be said for smokers!

Share this article

Facebook
Twitter
LinkedIn
WhatsApp

You may also like