Autumn Statement National Insurance Cuts

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February 28th 2024
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Autumn Statement National Insurance Cuts

Better than expected inflation and borrowing forecasts usher in a few tax giveaways.

The Chancellor Jeremy Hunt has just finished delivering the 2023 Autumn Statement and after weeks of speculation of national insurance tax cuts and a harder stance on benefits, he pretty much delivered exactly that.

2024 National Insurance Cuts
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In summary:

  1. Inflation has been over halved since the start cost of living crisis from 11.1 percent down to 4.6 percent today. It is projected to continue falling to 2.8 percent next year and then hit the Bank of England target of 2 percent by 2025.
  2. The country’s debt has a slightly better outlook with previous forecasts of 100 percent of GDP revised to 94 percent.
  3. Borrowing is lower than forecast this year and will also be lower next year according to the OBR. Borrowing falls to 1.1 percent of GDP by 2028/29 - which is lower than the fiscal rule of being less than 3 percent.
  4. Growth is predicted to rise to 1.7 percent by 2028.
  5. There will be increases to benefits by 6.7 percent from April 2024 - on average an increase of £470.
  6. Alcohol duties are to remain frozen until August 2025.
  7. Pensions triple lock to be enforced, which means an 8.5 percent increase to the State Pension from April 2024 - hitting £221.20 a week.
  8. The Chancellor reiterated his support for veterans by extending their specific National insurance relief for an extra year.
  9. Housing benefit rules to be unfrozen and will now cover 30 percent of local housing market rates.
  10. £50 million of extra funding allocated for the shortage of apprentices in sectors such as engineering.
  11. Three new investment zones will be created in the West Midlands, East Midlands and Greater Manchester. A second investment zone is also to be created in Wales.
  12. Struggling businesses will see the business rates standard multiplier rise with inflation but the Chancellor conceded that for smaller businesses the multiplier will be frozen for an extra year. The Retail, Hospitality & Leisure 75% discount will also remain for an extra year.
  13. Self Employed Class 2 National Insurance currently £3.40 a week over the £12,570 threshold is to be ‘abolished’. Effective from April 6th 2024.
  14. Self Employed Class 4 National insurance cut to 8 percent from current 9 percent. This applies to profits between £12,570 and £50,270. Effective from April 6th 2024.
  15. National insurance contributions from January 6th 2024 for employees cut from 12 percent to 10 percent. A saving of £450 per year for someone earning £35,000 a year.
  16. The temporary Full expensing tax relief is to be made permanent.
  17. Job Seekers claiming benefits for 18 months are enrolled in mandatory work search, but after an unsuccessful 6 months benefits will be cut.
  18. National Living wage raised to £11.44 per hour and now applies to people aged 21 and over (from last year’s 23 and over). Annual equivalent £22,308 or £1,859 - around £1,600 after taxes.
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