Jeremy Hunt's presentation of the Autumn Statement 2023 aimed to prioritise stability and growth. Within this announcement, Hunt unveiled 110 measures designed to stimulate growth, simplifying capital raising and reducing business taxes among them.
We thought we would share some of the points most relevant to those who are self-employed, please read below:
Business Changes
Full Expensing
This scheme grants companies 100% initial-year relief on qualifying main rate plant and machinery investments, including IT equipment. Initially introduced in the Spring Budget 2023, the scheme was set to expire in March 2026. The government anticipates this move will unlock an extra £14 billion in investment over the OBR's projected period, fostering sustainable economic expansion.
R&D Tax Credits Unified
Starting April 2024, the current R&D expenditure credit (RDEC) for larger businesses and the SME R&D scheme for smaller enterprises will merge into a single scheme. This consolidation will decrease the tax rate for loss-making companies from 25% to 19% and lower the threshold for additional support from 40% to 30%, expanding eligibility for approximately 5,000 more SMEs. Businesses fluctuating below the 30% threshold will also receive a one-year grace period, enabling more companies to qualify as 'R&D-intensive.' Forecasts predict these reforms will offer an additional £280 million in relief annually by 2028/29. However, the primary beneficiaries of the amalgamation between the two schemes—SMEs or larger enterprises—remain currently unclear.
Work Incentives
National Insurance
Hunt announced a reduction in the National Insurance rate from 12% to 10%. This decrease in the main employee National Insurance rate, from 12% to 10%, will take effect from January 6, 2024. He anticipates that this change will benefit 27 million individuals, resulting in savings of over £450 a year for someone on an average salary of £35,000. Hunt expedited the implementation of this measure to enable people to witness the benefits in their pay slips at the start of the new year, foregoing the usual April start date for such measures.
National Insurance for the Self-employed
Self-employed individuals earning over £12,570 will no longer be subject to the "Class 2" National Insurance charge of £3.45 per week. Hunt projects an average saving of £192 per year for the average self-employed person. Additionally, starting from April 2024, the Class 4 National Insurance on earnings between £12,570 and £50,270 will drop from 9% to 8%, resulting in an average annual saving of £350 for approximately two million self-employed individuals when combined with the removal of the compulsory Class 2 charge.
Pensions
The state pension is set to increase by 8.5% next year, aligning with average earnings and reaching £221 a week from April.
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