Autumn Statement 2023

The Autumn Statement was announced by the Chancellor yesterday. It included several tax and spending changes that will affect small businesses, including changes to National Insurance. 

 

Here is a summary of the main changes: 

 

 

There were significant changes to National Insurance (NI), including to Class 2 and Class 4 NI, which could affect around two million self-employed people. 

 

From April 2024, no one will be required to pay Class 2 self-employed NI contributions. Currently, self-employed people with profits above £12,570 pay a weekly flat rate of £3.45, but this will be abolished from 6th April 2024. However, they 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, but they won’t need to pay any National Insurance. 

 

Those with profits under £6,725 and others who pay Class 2 NI contributions voluntarily to get access to contributory benefits including the State Pension, will still be able to do so. 

 

The main rate of Class 2 NI contributions had been due to rise to £3.70 per week in April 2024. But for those paying voluntarily, the current rate of £3.45 per week will be maintained for 2024-25. 

 

The main rate of Class 4 self-employed NI contributions is to be cut from 9% to 8% from 6th April 2024. Self-employed people will pay Class 4 NI at the new rate of 8% on profits between £12,570 and £50,270 per year and 2% on profits over £50,270. 

 

Class 1 NI employees’ contributions will be reduced from 12% to 10% on earnings between £12,571 and £50,271 (and will remain at 2% on anything above that) on 6th January 2024. 

 

‘The ‘full expensing’ policy - announced in this year’s Spring Budget - will now become permanent. Full capital expensing allows qualifying businesses to deduct investment in certain equipment from their profits to reduce the amount of Corporation Tax payable. 

 

Companies that invest in other assets that don’t qualify for the full 100%, such as long-life assets, also benefit from a 50% first-year allowance and this will continue. 

 

 

 

Business rates multiplier 

The small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be increased in line with the September Consumer Prices Index (CPI) to 54.6p. This will take effect in the 2024-24 tax year. 

 

 

The current 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties is being extended for 2024-25. 

 

 

The National Living Wage will increase to £11.44 from £10.42 from April 2024. 

 

 

The government is to introduce changes to cash basis accounting following a consultation launched earlier this year. Cash basis accounting is a simplified method which allows certain businesses to record their income and costs at the date the money comes in or is paid out, rather than the date displayed on an invoice they issue or bill they receive. A business including income and costs on the invoice and bill dates is referred to as using the accruals basis of accounting. 

 

 

• cash basis is set as the default, with an opt-out for accruals (which is the reverse of the current position where accruals are the default) 

• the turnover threshold for businesses to use the cash basis will be removed 

• the £500 limit on interest deductions on the cash basis will be removed 

• restrictions on using relief for losses made on the cash basis will be removed 

 

 

Measures will be introduced that simplify the requirements for quarterly updates and remove the need to provide an End of end-of-period statement. The changes will take effect when MTD for ITSA is introduced in April 2026.