Sandison Lang news Issue 30
Winter 2023
THE DETAILS BEHIND THE AUTUMN STATEMENT Jeremy Hunt presented his second Autumn Statement in a markedly less dramatic economic landscape than the first last year. Back then, the unfunded tax cuts announced in the now infamous ‘Mini Budget’ of the Trussonomics era saw increased volatility in financial markets. The Chancellor said it was an ‘Autumn Statement for growth’ which included 110 measures to ‘reduce debt, cut taxes and reward work’. Mr Hunt said: “We cut taxes to help bigger businesses invest, we cut taxes to help smaller businesses grow. We cut taxes for the selfemployed and keep our country running.” The headline announcements focussed on changes to National Insurance policy for employed and self-employed workers, although no good news on this front for employers. For the self-employed, he abolished Class 2 NICs
and reduced the rate of Class 4 NICs from 9 per cent to 8 per cent in April 2024. Employed workers will also see a decrease in their National Insurance, down from 12 per cent to 10 per cent from January 2024. The Office for Budget Responsibility (OBR), the watchdog which oversees the Treasury and its spending, predicts these cuts to cost around £27billion. It is also highly unusual for this last fiscal change to occur during the tax year rather than at the start – a point some took to signal a looming general election. Indeed the speech was critiqued as being ‘vote focussed’ – small changes being presented to give some good news without offering too much in the way of real tax cuts for individuals. While the National Insurance cuts announced might be beneficial, the freeze on income tax thresholds is still dragging more people into
higher tax bands. With inflation still high, wages might be increasing and more of people’s income will be charged at the higher rate of tax. According to the OBR, this fiscal drag will raise an estimated £45 billion in additional revenue between this tax year and 2028 when the freeze is scheduled to end. It will also bring 3 million more people in to the higher rate of tax and 400,000 into the additional rate in the next five years. Previously, the additional rate threshold was £150,000 but was reduced to £125,140 in the last Budget. There was some good news for ISA savers. There will no longer be a limit on the number of ISAs that investors can support from April – although the contribution limit will remain at £20,000 per year. New rules will allow transfers between ISAs and the inclusion of ‘illiquid assets’ such as property and private equity.
Season’s greetings from the full team at Sandison Lang Sandison Lang News Issue 30 Winter 2023
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