Following up on our previous article focused on businesses (you can find it here) we now aim to provide a summary of the measures included in the Autumn statement affecting our private clients.
First, it was confirmed that there will be no changes to the tax rates of income tax or capital gains tax and to the NICs Lower Earning Limit and Small Profit Threshold. Also, the personal allowance will stay at £12,570.
The announcement with the most notable impact on a considerable number of individual taxpayers was the decrease in Class 1 employee National Insurance Contributions, dropping from 12% to 10% starting January 6, 2024. As a result, the average worker earning £35,400, is expected to experience a tax reduction exceeding £450 in the tax year 2024/2025.
Furthermore, from April 1, 2024, eligible employees aged 21 and above will receive a minimum hourly wage of £11.44, reflecting a 9.8% rise in the National Living Wage. At the same time, the management of taxes for individuals earning more than £150,000, taxed through PAYE, will be simplified, as they will be exempted from the obligation to file a self-assessment return unless they have another reason to do so.
The Chancellor has also announced the intention of the Government to correct an unfairness in the operation of the Off Payroll Working Rules (often referred to as IR35). Under the new rule, deemed employers will be entitled to offset tax and national insurance contributions paid by a contractor, where the engagement was incorrectly treated as self-employed.
Finally, the Government confirmed the abolition of the pension lifetime allowance, which means there will be no limit to the total value of pension benefits that can be accumulated with tax relief, starting from April 6, 2024. From the same date, the individual savings accounts (ISAs) administration will be simplified thanks to the digitalisation of their reporting and further permissions granted, such as multiple subscriptions to the same type of ISA and more in-year transfers between providers.
Please contact a member of the WellTax team if you would like to discuss anything in further detail.
