It’s that time of year when the Government revealed it’s Autumn Statement, but as we’ve come to expect from previous years most key changes were already rapidly circulating in the media in the run up to the Chancellor making this statement on Wednesday 22nd November.
Anyone interested in reading the full Autumn Statement can do so here, but we’ll refer to it throughout this article.
With 110 measures being promised across the budget reform across a range of areas, we take a look at what it will specifically mean for workers.
National Insurance is going down
It was announced that effective from 6th January 2024, Class 1 employee National Insurance contributions (NICs) will decrease from 12% to 10%. Based on a £35,400 salary the Government says this will provide a tax cut of over £450 in 2024-25, in a move designed to benefit over 29 million people.
Plans have also been made for self-employed workers, similarly coming into effect from 6th January 2024. With Class 4 National Insurance Contributions dropping from 9% to 8%, and the controversial Class 2 NICs being abolished. According to Government calculations this provides a £350 saving for 2024-25 based on an annual income of £28,200.
A one-year extension was also announced for employers engaging eligible veterans, seeing businesses continue to pay no employer NICs on annual earning up to £50,270 in the first year a qualifying veteran takes up civilian employment. As a signatory of the Armed Forces Covenant and an armed forces friendly recruiter, it’s a move that’s very much welcomed by NRL.
National Living Wage increases
Changes were also committed for the National Living Wage (NLW), which will start making a difference from 1st April 2024. The age where the NLW applies will change from 23 to 21 years old. Meaning more people will be eligible to receive the higher standardised hourly rate, which will go up £1.02 to £11.44 – which the Government says is a 9.8% increase.
Workers under the age of 21 will also see changes from April next year, with the 18-20 year old rate moving to £8.60 and the 16-17 year old hourly rate increasing to £6.40 – a 21.2% increase. Apprentices will also benefit with a similar 21.2% increase, making their hourly rate £6.40 as well.
Accommodation offset is also planned to increase to £9.99, giving workers an extra £0.89.
It’s a move the Government’s Low Pay Commission say is the biggest increase to minimum wage rates in terms of cash value.
In comparison, people who work for organisations who are members of the Living Wage Foundation - who voluntarily pay workers the Real Living Wage - will see an hourly rate of £12.00 per hour regardless of age, and £13.15 for those in London. Announcing their annual increase last month, the Living Wage Foundation calculate their Real Living Wage each year based on the cost of living, whilst ensuring people can still afford the surprises that life brings up, such as an emergency trip to the dentist.
Self-Assessment tax returns
For those self-employed, the Chancellor’s Autumn Statement announced that the Government will eliminate the need for individual to file a Self-Assessment return form from 2024/25, where income is taxed only through Pay As You Earn pay arrangements.
IR35 PAYE liability
Legislation will be introduced in the Autumn Finance Bill 2023 that will see a reduction in the PAYE liability of a deemed employer where an error is made applying the off-payroll working rules. This will allow the taxes paid by the worker and their intermediary on payments received to be accounted for, offsetting it against the outstanding tax bill. Ending concerns around the ongoing double taxation issue.
Pension changes for future planning
For those heading towards retirement age, an update on the state pension was also included in the Autumn Statement.
The Triple Lock will remain in place, whilst increasing the basic state pension by 8.4% in April to fall in line with average earnings.
For businesses, the Chancellor also announced that the tax break organisations can currently use to purchase new machinery and equipment will now be made permanent, in a move it hopes will drive innovation and investment. The existing tax break was due to end in 2026, but this change will allow businesses to continue to fully expense equipment including computers, large construction equipment, tools and vans - as well as practical equipment such as desks and chairs.
£4.5bn in funding was also announced for manufacturing sectors including green energy, life sciences, aerospace and zero-emission vehicles. As well as £80m more for new regeneration projects in Scotland to help with levelling up.
What do these changes mean to you?
Where you’ll benefit, such as National Insurance decreases and pay rate increases, our branches and payroll teams will manage all changes on your behalf as and when they come into effect. If you’re working as a contractor through our Pay As You Earn (PAYE) service, don’t forget you can also access a range of benefits including access to virtual GP appointments, wellbeing support and shopping discounts to help make your wages go further.