Autumn is the season of traditions. The clocks go back, spooky season comes and goes, the Christmas lights go up, and, perhaps the most eagerly anticipated tradition, the Chancellor’s Autumn Statement is delivered.
With taxes on individuals at an unprecedented high, a focus on tax reduction was the Chancellor’s tagline of the day. These reductions were focussed on national insurance contributions. Importantly for Scottish taxpayers, national insurance, unlike income tax rates, is not a devolved tax. Therefore, the announced changes apply to both Scottish and “rest-of-UK” taxpayers.
For employed individuals paying Class 1 National Insurance Contributions, the tax rate will drop from 12% to 10%. This rate currently covers monthly earnings between £1,048 to £4,189. The rate reduction will apply from 6 January 2024 onwards.
Self-employed taxpayers currently pay Class 2 and Class 4 National Insurance Contributions. From 6 April 2024, the Class 4 rate will be reduced from 9% to 8%. This rate currently covers profits between £12,570 and £50,270. In addition, Class 2 contributions, currently £3.45 per week, will no longer be required to be paid. The option to pay these voluntarily shall remain.
There were several further significant announcements in yesterday’s statement:
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- The national living wage will increase to £11.44 per hour.
- The state pension triple lock (a commitment to increase State Pensions by whichever is highest of average earnings growth, CPI inflation, or 2.5%) has been honoured in full. Therefore, from 6 April 2024 the full new state pension will increase by 8.5% to £221.20 per week.
- HMRC are to increase their debt management service, with the intention to further support those who cannot settle their tax liabilities, while ensuring those who can continue to do so.
- The national living wage will increase to £11.44 per hour.
In keeping with a more recent tradition, media speculation of overhauls to Capital Gains Tax (CGT) or Inheritance Tax (IHT) were unfounded. A now well-established tradition, that will undoubtably continue into another year.
Murray Beith Murray, Edinburgh
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