Against this backdrop our new Chancellor presented his Autumn statement yesterday in which there was some news for employers:
- The legally-enforceable minimum wage for people aged over 23 will increase from £9.50 to £10.42 an hour from April 2023
- State pension payments and means-tested and disability benefits will increase by 10.1%, in line with inflation
- The top 45% additional rate of income tax will be paid on earnings over £125,140, instead of £150,000 - this being a sharp divergence from the Truss government's plan to scrap the 45% rate
- Income tax personal allowance and higher rate thresholds will be frozen for further two years, until April 2028
- Tax-free allowances for dividend and capital gains tax are also due to be cut next year and in 2024
- The UK's inflation rate is predicted to be 9.1% this year and 7.4% next year
- Unemployment is expected to rise from 3.6% to 4.9% in 2024 (although news reports have suggested it will be double this)
Some measures previously announced under the Truss government have already been unwound, including:
- The 2021 IR35 reforms will be retained, not revoked, meaning that companies that engage contractors via an intermediary (such as a personal service company) are responsible for assessing (and, potentially, deducting) tax
- There will be no cut in the basic rate of income tax
Whilst others have been retained:
- The Government intends to remove the cap on bankers' bonuses
- The National Insurance (NI) increase which took effect in April 2022 under Boris Johnson's government has already been reversed, with the previous rate of NI being restored as of 6 November.
