In the Autumn Statement, the Chancellor of the Exchequer, Jeremy Hunt, updates the Commons on the economy. Often this update leads to announcements of major spending decisions and tax changes. This year was no exception with the Chancellor promising 110 ‘measures’.
Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, delivered his Autumn Statement on 22nd November 2023, sitting down at 13:27 GMT.
Key pensions points
- The Triple Lock has been maintained. The basic State Pension, new State Pension, and Pension Credit standard minimum guarantee will be uprated in April 2024 by 8.5%
- Measures are introduced to deliver the changes required to abolish the Lifetime Allowance entirely and to clarify the tax treatment of pension savings
- To tackle ‘small pot’ pensions, the government is launching a consultation on a ‘lifetime provider model’ which would allow individuals to have contributions paid into their existing pension scheme when they change employer.
- The government intends to establish a Growth Fund within the British Business Bank. It will allow pension funds access to investment opportunities in the UK’s most promising businesses.
- The Department of Work and Pensions published a review of Master Trusts. The FCA will consult on rules for contract-based schemes in Spring 2024.
Key personal taxation points – National Insurance Contributions (NICs)
- The main rate of Employee NICs will be cut from 12% to 10%, from 6 January 2024.
- The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be reduced from 9% to 8% from April 2024.
- Class 2 NICs, currently paid at a rate of £3.45 per week by the self-employed earning more than £12,570, will effectively be abolished from April 2024.
Individual Savings Accounts (ISAs)
- Changes to the ISA rules will be introduced with effect from April 2024 including:
o allowing multiple subscriptions to ISAs of the same type every year
o allowing partial transfers of ISA funds in-year between providers
o remove the requirement to reapply for an existing dormant ISA
o harmonising the account opening age for any adult ISAs to age 18
o Long-Term Asset Funds to be permitted investments in the Innovative Finance ISA
o open-ended property funds with extended notice periods are to be permitted in the Innovative Finance ISA.
Key business taxation points
- ‘Full expensing’ is to become a permanent feature of the UK tax system.
- The tax reliefs in investment zones will be extended from 5 to 10 years.
- Tougher consequences for promoters of tax avoidance schemes. This includes a new criminal offence for those who continue to promote avoidance schemes after receiving a notice requiring them to stop; and a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance.
UK Retail Disclosure Framework
- A draft statutory instrument and policy note published as part of the programme to replace the EU Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation.
- Options to be explored to launch a share sale to retail investors in the next 12 months.
Commentary and further details
The ‘full expensing’ tax relief for businesses was widely predicted. This means that businesses will get tax relief for the cost of plant and machinery in the year of purchase.
There are new lifetime allowance measures which:
- clarify how lump sums and lump sum death benefits will be taxed in its absence
- clarify the position of individuals with LTA protections
- clarify lump sum protections or LTA enhancement factors
- introduce a new Overseas Transfer Amount (OTA) for transfers from UK pensions to QROPS.
This is the equivalent of the Lump Sum Death Benefit Allowance of £1,073,100 (or protected LTA if higher). Transfers are subject to an Overseas Transfer Charge (OTC) of 25% on the amount above the OTA if exceeded. It is understood that this applies to all transfers, without the previous OTC exemptions.
Although Class 2 NICs are to be abolished, the interests of lower-paid self-employed people who currently, pay them voluntarily to build entitlement to certain contributory benefits including the
State Pension will be protected.
No changes were announced to the personal allowance, income tax rate bands, capital gains tax, ISA subscription limits, or (despite speculation prior to the Autumn Statement) inheritance tax
Where local taxation information has been provided, this is based upon a generic understanding of the jurisdiction as a whole. Taxes may vary regionally due to local tax office interpretations, and tax rules may change on a regular basis. This is only a guide and it is highly recommended that you seek local specialist tax advice. Pension trustees may require specialist tax advice.
Source: QB Partners
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