Autumn Statement 2023 – tax policy announcements

In the Chancellor's Autumn Statement, the government has announced several tax changes.  The key announcements are as follows:

Class 1 NICs

Class 1 NICs are paid by both employees and employers on earnings from employment.

Employees currently pay Class 1 NICs at a rate of 12% on their earnings between £1,048 and £4,189 per month, however, it has been announced that from 6 January 2024 the rate will be reduced to 10%. This would result in tax cut to employees, an example being that an individual earning £35,400 per year will benefit from a £450 tax cut.

Class 2 and 4 Self-Employed NICs

Class 2 and Class 4 NICs are paid by the self-employed.

From 6 April 2024, Class 2 self-employed NICs will be abolished. This means that self-employed individuals with profits above £12,570 will no longer be required to pay Class 2 NICs. Self-employed individuals with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs as they currently do.

Those self-employed individuals with profits under £6,725 who voluntarily pay Class 2 NICs to get access to contributory benefits will continue to be able to do so. The main rate of Class 2 NICs is usually uprated by the Consumer Price Index and had been due to rise from £3.45 to £3.70 in April 2024. However, for those paying voluntarily, the current rate of £3.45 will be maintained for 2024-25.

In addition to the abolition of Class 2 NICs, the main rate of Class 4 self-employed NICs payable on profits between £12,570 and £50,270 will be cut from 9% to 8% from 6 April 2024.

Investments made by companies in qualifying plant and machinery after 1 April 2026 will continue to qualify for 100% first year allowance (for main rate assets) and a 50% first year allowance for special rate assets.  The measures were initially temporary but have now been made permanent and the original 31 March 2026 end date (announced in the 2023 Spring Budget) has been removed.

As originally announced in the Spring Budget, the Government has reconfirmed its commitment to abolish the pensions lifetime allowance from 6 April 2024.