Autumn Statement 2023

On 22 November 2023, Chancellor of the Exchequer, Jeremy Hunt, presented his Autumn Statement in which he said the Government will “reduce debt, cut taxes, reward work”.

Self-employed taxes

• Class 2 National Insurance Contributions (“NICs”) is a flat rate compulsory charge of £3.45 a week paid by self-employed individuals if profits are £12,570 or more a year for state pension entitlement. This is being abolished but self-employed individuals will still have access to contributory benefits, including the state pension (more details at 3.10 of the Autumn Statement document).
• Class 4 NIC 9% on all profits between £12,570 and £50,270. This is being cut by 1%, to 8% from April 2024.
• HMRC will rewrite guidance around the deductibility of training costs for sole traders and the self-employed when calculating taxable profits.
• Simplifications will be made to Making Tax Digital (MTD) for Income Tax Self Assessments, including maintaining the current MTD threshold at £30k.

Employment taxes

• The 12% rate of Employee NICs is being cut by 2%, to 10%. This is being introduced from 6 January 2024.
• Government state they are taking action by reducing opportunities for tax fraud in the construction industry and taking action against promoters of tax avoidance.
• Government will legislation in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE of a deemed employer under the Off-Payroll Working Rules (“IR35”) to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying IR35. We saw a consultation on this earlier this year – see our news here.
• Government will introduce reforms in the Autumn Finance Bill 2023 to the Construction Industry Scheme (“CIS”), including adding VAT compliance as part of the Gross Payment Status (“GPS”) compliance test, giving HMRC more power to remove GPS immediately in cases of fraud. Alongside this, the government is also announcing simplifications to other aspects of the scheme, which will be subject to technical consultation.

Minimum Wage Rates from April 2024

The National Living Wage will be increasing by £1.02 and it will extend to 21 year olds for the first time (previously applied to 23 year olds).

Pensions

Workers will be given the right to require new employers to pay pension money into an existing pension pot.

Payment terms

30 day payment terms set for public sector contracts will auto apply through subcontractor supply chain. From April 2024, contractors bidding for large Government contracts (over £5m) have to demonstrate they pay their own subcontractors’ invoices within an average of 55 days (tightening to 45 days from April 2025 and eventually 30 days in the coming years).

The Autumn Statement documents can be found here.