HMRC: Autumn Statement 2023

Yesterday, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Autumn Statement speech.

The Autumn Statement package sets out a number of tax measures designed to strengthen economic growth through supporting British businesses and increasing the number of people in work. The statement also announces a range of administrative changes which make the tax system simpler and more modern, ensuring businesses can interact with it more easily. Some of the key measures are detailed below, and information on all the measures announced today, including the annual uprating of duties and rates, can be found in the Autumn Statement 2023 and in other documents from the Office for Budget Responsibility.

An overview of all the tax legislation and rates announced today is also available. Tax Information and Impact Notes (TIINs) contain more detail on the impact of measures that are being legislated for.

National Insurance contributions (NICs) rates 

The government has announced a cut to the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024 and a cut to the main rate of Class 4 self-employed NICs from 9% to 8% from 6 April 2024. It has also announced that no one will be required to pay Class 2 self-employed NICs from 6 April 2024. Details of this change are:

• from 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs but will continue to receive access to contributory benefits including the State Pension
• those 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 do currently
• those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so

The government will set out next steps on Class 2 reform next year.

We will be publishing further guidance on these changes shortly, in the meantime we would ask that you take steps now to start work with your payroll software provider, and where applicable IT delivery partners, to get ready to implement the change to Class 1 employee NICs that comes into effect from 6 April 2024. HMRC's Basic PAYE Tools product will be updated to reflect this change.

Extending the National Insurance contributions (NICs) relief for hiring veterans

The government has extended the NICs relief for employers who hire former members of the UK regular armed forces until 5 April 2025. This provides a relief to employers on the secondary Class 1 NICs due on the wages of veterans for the first 12 months of their first civilian employment. The relief applies to earnings up to the Veterans Upper Secondary threshold, which is £967 per week.

Capital Allowances - permanent full expensing 

At Spring Budget 2023, the government introduced two new temporary first-year allowances. For qualifying expenditure on the provision of plant or machinery incurred on or after 1 April 2023 but before 1 April 2026, companies can claim a 100% first-year allowance for main rate expenditure - known as full expensing - and a 50% first-year allowance for special rate expenditure

Today's announcement makes full expensing and the 50% first-year allowance permanent by removing the expiry date of March 2026.

Tax reliefs

A range of measures on tax reliefs have been announced, including enhanced support for Research and Development (R&D) intensive small and medium-sized enterprises, an extension to the 'sunset date' for freeport tax reliefs and administrative changes to the creative industry tax reliefs.

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) design changes 

The government will make design changes to MTD for ITSA, simplifying and improving the system for taxpayers and their representatives. The requirement to provide an End of Period Statement will be removed and some taxpayers, including those without a National Insurance number, will be exempted from MTD. Taxpayers who are using MTD will be able to be represented by more than one tax agent. Draft regulations will be published for technical consultation later in 2023.

National Minimum and Living Wage Uprating 2024 to 2025

From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. Young people and apprentices on the National Minimum Wage will also see a boost to their wages, which will increase to £6.40 an hour.

Off-Payroll Working (IR35) - calculation of PAYE liability in cases of non-compliance

The government will legislate in Finance Bill 2023 to enable organisations to reduce their additional PAYE liability under the off-payroll working rules, to account for Income Tax and Corporation Tax already paid by a worker and their intermediary where a client organisation has been found to be non-compliant with the rules. The changes will take effect from 6 April 2024. A summary of responses to the consultation launched in April 2023 has also been published.