The Autumn Budget saw a raft of announcements affecting people and businesses alike. The Chancellor of Exchequer, Jeremy Hunt, set out three economic priorities:

1. Half inflation
2. Grow the economy
3. Reduce debt

The Chancellor explained that forecasts illustrate the economy will grow by 0.6% this year and 0.7% next year.

To add to the good news, inflation has now more than halved from a peak of over 11% last Autumn to 4.6% in October 2023.

With inflation falling and the economy and public finances stablised after a series of unprecedented shocks, the government can now take the long-term decisions necessary to strengthen the economy and build a brighter future.

There have been some elements in speculation and whilst none of that has been raised today, there are some areas that have come as a very welcome surprise 😃

Here we have summarised some key takeaways from the budget 💯

State Pension

The State Pension will be increased by 8.5% in April 2024. This is a result of the Government honouring the Triple Lock that was introduced in 2011 which ensures that the State Pension increases in line with the higher of

• Consumer Price Index (CPI)
• National Average Earnings (NAE)
• 5%

The CPI figure that was used in the triple lock is September’s inflation figure (published in October) and was 6.7%. However, the increase in National Average Earnings over the same period as 8.5%.  This therefore means that state pensions are increasing by 8.5% in April 2024.

National Insurance Rates

It was announced today that from 06 January 2024, the rate of Class 1 National Insurance paid by employees will reduce from 12% to 10% for earnings between £12,571 and £50, 271. The rate for earnings above this threshold, will remain at 2%.

There is also a sprinkling of joy for those who are self-employed, as they are abolishing Class 2 National Insurance rates entirely (which is a saving of £3.45 per week), and Class 4 National Insurance contributions are reducing from 9% to 8% for profits between £12,571 and £50,270 in April 2024. The rate for earnings above this threshold, will remain at 2%.

Business Super-Deduction

There is now a permanent change to the super deduction incentive meaning that it will continue until otherwise stated. Companies investing in qualifying new plant and machinery assets will be able to claim 130% super-deduction capital allowance on these investments thus reducing the impact of corporation tax.

National Living Wage

This is due to increase by 9.8% to £11.44 in April 2024, with the age threshold also being lowered from 23 to 21 years old.

What’s remaining

• The personal allowance which will remain at £12,570
• The inheritance tax threshold which will remain at £325,000 (Nil Rate Band) and up to £175,000 (Residence Nil Rate Band) per person.
• The ISA allowance which will remain at £20,000.
• The Pension Allowance which will remain at £60,000 or 100% of relevant earnings (whichever is lower).
• And lastly, the capital gains tax allowance that is still set to reduce further to £3,000 in April 2024.

Additional points

• Reform of the Welfare System with the ‘Back to Work’ plan
• Increase in Universal Credit by 6.7% in the 2024/25 tax year
• Continued freezing of the local housing allowance
• Business rates discount for hospitality, retail and leisure

We hope that you found this useful and if you have any queries, please do not hesitate to contact us on 01285 708444 or e-mail hello@proposito.co.uk!