The big news around the Autumn Statement was the cuts to National Insurance (NI), which impacts both employees through their class 1 contributions but also the self-employed. The Chancellor recognised the important work undertaken by the self-employed and wanted to simply the tax system for them.
Self-employed individuals do not just pay one type of NI – they pay class 2, which gives them an entitlement to basic State Pension, as well as a range of other benefits, and they also pay class 4, which is based on the amount of profits they have in a tax year. In a bid to simplify matters, the Chancellor abolished class 2 saving a self-employed individual £3.45 per week.
Importantly, individuals with profits of £6,725 or higher will continue to qualify for state benefits, including their State Pension, and those with profits under £6,725, who have previously paid voluntary NI contributions to maintain their entitlement to state benefits will be able to continue to do so.
This abolition of class 2 results in a NI saving of £350 for an individual making profits of £28,800.
There was also a reduction in the class 4 NI for those with profits between £12,570 and £50,270. From April 2024 the rate will fall from 9% by 1%. The 2% rate for amounts above this threshold will remain.
Business rates
The Chancellor announced a business rates support package to assist all small businesses and those in the Retail, Hospitality, and Leisure (RHL) sectors:
The small business multiplier used to calculate business rate bills is being frozen for the fourth consecutive year, providing some relief to businesses with a rateable value of under £50,999. Above this level standard multiplier will be increased in line with CPI from April 2024, meaning business rates bills for these businesses will increase.
The Chancellor decided to continue the relief for hospitality, retail and leisure businesses, maintaining the discount they receive against their business rates at 75%, until March 2025.
Making Tax Digital
The Government remains committed to delivering Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). Under the current proposals, Sole Traders and Landlords with income over £50,000 will be mandated to join MTD for ITSA from April 2026, and those with income over £30,000 from April 2027.
The guidance around the mandate and the mechanics for those impacted is still changing. There has been some simplification with the removal of one of the required annual returns.
If you would like advice and support about how the changes in the Autumn Statement will impact you and your business please call 0808 144 5575 or email help@armstrongwatson.co.uk
