At the end of November, the autumn statement was realest.
As with any government announcement, a lot of information and updates were released. In this blog, we have removed the jargon and focused on the topics that will affect our clients.
Changes that will affect employees:
- Employees will be pleased to hear that from the 6th January 2024, the national insurance rate will be reducing by 2%. This means that from January, Class 1 NI will be deducted from your pay at 10%, rather than the current rate of 12%.
Changes that will affect the Self-employed:
- The reduction of national insurance has also been passed onto the self-employed, by the abolishment of Class 2 National Insurance contributions. Currently, most self-employed workers will be paying £3.45 per week in Class 2 NIC – From the new tax year (6th April 2024), class 2 NI will no long exist. The Class 4 national insurance contributions have also been reduced from 9% to 8%.
- As announced in previous budgets, HMRC are still rolling out plans for Making Tax Digital for self-assessment taxpayers. From April 2026, quarterly submissions for self-assessment will need to be made. Unlike previously announced, the additional summery submission at the end of the year has now been dropped, resulting in just 4 quarterly submissions.
With each quarterly submission, a cumulative total of income for the year- to-date will need to be included. This will remove the need to submit amendments to previous quarters if corrections are needed.
Other tax updates:
- An increase in national living wage from April 2024 was also announced. The hourly rate will increase from £10.42 to £11.44. Along with this increase, the age threshold has also been reduced to 21-year-olds for the first time.
- Changes to the capital gains allowance have also been announced, reducing the exemption allowance by half, to £3000 per year, from April 2024.
We hope the information above has helped clarify some of the change that will affect you and your business in the coming few months. If you have questions on other announcements or wish for more information regarding the above changes, our team is always available to answer your questions.
