News and Publications

Autumn Statement 2023

Posted: 24/11/2023

The Chancellor of the Exchequer, Jeremy Hunt, delivered his Autumn Statement on 22 November. It focused on government plans for economic growth, rewarding work, and backing British business.

One of the more interesting issues for private client practitioners had been whether the Autumn Statement would contain potential changes to, or even the abolition of, inheritance tax. Despite intense speculation beforehand, no inheritance tax-related measures were announced at all.  

The Autumn Finance Bill 2023, which will introduce a number of measures announced in the Autumn Statement, is expected shortly.  

What’s new?

The Autumn Statement was relatively quiet for private client practitioners. The government focused its tax cuts on National Insurance contributions (NICs). Changes included:

  • a 2% cut for NICs from 12% to 10% (class 1 NICs) from 6 January 2024;
  • a 1% cut for self-employed NICs (class 4 NICs) from 9% to 8% from 6 April 2024; and
  • self-employed people with profits above £12,570 will no longer be required to pay class 2 NICs from 6 April 2024, but will continue to receive access to contributory benefits, including the state pension. 

Foreign investors and businesses

To encourage those who wish to invest in the UK’s future, the chancellor announced that the government is taking steps to boost foreign direct investment, through supporting the Office for Investment in strengthening its concierge offer to strategically important investors.

There were no changes to the various, incentivising tax reliefs, which individuals might take advantage of, such as business asset disposal relief, Enterprise Investment Scheme relief or business investment relief for individuals claiming the remittance basis, however.

Annual tax on enveloped dwellings

The annual chargeable amounts for the annual tax on enveloped dwellings (ATED) will also be uprated by the September CPI figure of 6.7% for the 2024-25 ATED charging period.  Whilst an uprating of the chargeable amount is routine for ATED, the relative increase is unusual in tax terms. This means that the annual cost of holding residential property in this way continues to increase steeply each year.  

Previous announcements

The government also used the Autumn Statement to reconfirm its plans to progress with certain policies. It will legislate, in the Autumn Finance Bill 2023, to remove the lifetime allowance for pensions. Legislation will also clarify the taxation of lump sums and lump sum death benefits for pensions and will take effect from 6 April 2024.

The Autumn Finance Bill 2023 will also introduce tougher consequences for promoters of tax avoidance schemes (including criminal sanctions) and a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance schemes.

Points to remember for 2024

Finally, when considering this Autumn Statement, it is important to remember the tax changes, previously announced, some of which will be coming into force from 2024:

  • the capital gains tax (CGT) annual exempt amount (AEA) for individuals and personal representatives of a deceased’s estate will reduce from the current figure of £6,000 to £3,000 from April 2024;
  • the AEA will also be reducing from £3,000 to £1,500 for most trustees;
  • the dividend allowance will reduce from £1,000 to £500 from April 2024;
  • the inheritance tax thresholds known as the nil-rate band and the residential nil-rate band (the latter of which is tapered for estates valued over £2 million), will both remain frozen at their current rates, £325,000 and £175,000 respectively, until 2028; and
  • the stamp duty land tax (SDLT) reductions (for example, changes to the SDLT residential exemption threshold to £250,000 for some) remain in place until March 2025

The reduced or frozen allowances and thresholds will have a real impact as they result in higher taxes on income and capital gains, and in a greater inheritance tax burden.

2024 is also likely to be a general election year. We can expect the 2024 Budget to be influenced by this event, and speculation to start well in advance as to any potential tax cuts or other changes it will contain. 

If you have any questions or concerns about the impact of the Autumn Statement on your affairs, please contact us. We will be happy to advise.

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