12 Dec The Autumn Statement 2023 – how will it affect you?
Jeremy Hunt, the current Chancellor of the Exchequer, gave his Autumn Statement last week. Here we look at the main points and explain how they will affect contractors and recruiters.
Tougher consequences for tax avoidance
The government announced that it intends to introduce tougher consequences for promoters of tax avoidance schemes, including a new criminal offence for those who ‘continue to promote avoidance schemes after receiving a notice requiring them to stop’, and a new power for HMRC to disqualify directors of companies involved in promoting tax avoidance. However it stopped short of announcing any reform or regulation of umbrella companies, which we know are damaging contractors throughout the country. In our opinion it was a missed opportunity to vastly improve the umbrella offering for UK contractors and recruiters as well as ensure that tax revenue is not lost to fraud.
Private Sector Growth Focus
The statement placed an emphasis on increasing private sector growth through creating optimum conditions for a thriving public sector such as removing barriers to investment as well as tax cuts for businesses. The Super Deduction to incentivise business investment, introduced in April 2023 and designed to allow businesses to write off the full cost of qualifying plant and machinery investment, worth £10 billion per year, is now permanent. Also included are changes worth £280 million a year which are designed to simplify and improve Research and Development tax reliefs, in order to drive innovation.
A business rates support package, worth £4.3 billion over the next five years, was also announced to support small businesses and the high street. The small business multiplier was frozen for a fourth consecutive year and Retail, Hospitality and Leisure (RHL) relief was extended.
In the public sector the government is committed to its Public Sector Productivity Programme which is designed to reimagine the way in which public services are delivered. The aim is to boost productivity by spending which is focused on the government’s priorities, such as cutting unnecessary bureaucracy and driving productivity through technology.
Its NHS Long Term Workforce Plan estimates that the total community workforce will almost double in size over the next 15 years so that more care can be delivered in home settings.
Plans are also in place to cap the size of the Civil Service, saving an estimated £1 billion by March 2025.
National Insurance Contribution Cuts
The main rate of Class 1 employee National Insurance Contributions (NICs) will be cut from 12% to 10% from 6 January 2024. This will benefit around 28 million people, with average salary earners saving approximately £450 per year.
Class 4 self-employed NICs will also fall from 9% to 8% from January, and Class 2 self-employed NICs will be abolished completely. This will benefit around 2 million people with average salary earners saving approximately £350 per year.
National Living Wage Increase
From April 2024 the National Living Wage (NLW) will be increased by 9.8% to £11.44 per hour (for people aged over 21) and will benefit over 2.7 million low paid workers, adding an average of £1,800 per year to their earnings.
Apprentices and young people will also receive an increase to their wages, and working age benefits will rise by 6.7% next year. However, the government also announced more stringent job-seeking requirements for claimants to incentivise a return to work.
Apprenticeship Training Pilot
£50 million for a two-year apprenticeships pilot was also announced in order to stimulate training and ensure that both school leavers and adults can access high quality apprenticeships in manufacturing, engineering, technology and other growth sectors
Back to Work Plan
This £2.5 billion plan is designed to support long-term sick and disabled people and the long-term unemployed into work and help them stay in work. Initiatives to encourage that include an expansion of the NHS Talking Therapies programme and Individual Placement and Support to help people with mental health conditions, as well as working with employers and businesses to develop and promote ‘best employment’ practices to support almost 60,000 people across England.
Integrated Care Systems Prospectus Launch
This measure is designed to increase access to health and employment support for people who have been out of work through illness on a long-term basis. The prospectus will enable Integrated Care Systems in England to develop local strategies for work and health support to enable people to resume work.
There was only one reference to IR35 within the Autumn Statement – “Off-Payroll Working (IR35) – calculation of PAYE liability in cases of non-compliance – The government will legislate in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules.” While we are supportive of this measure, which is designed to ensure that employers, recruiters and contractors are not penalised twice for the same mistake, we regret the lost opportunity to implement umbrella company reforms and regulation.
If you’re a contractor and you’d like to understand in more detail how the Autumn Statement affects you and your livelihood, or you’re a recruiter who’d like more information about how it will affect your contractors, you can call us for free, impartial and expert advice on 0800 084 3058, email us at email@example.com or fill in the contact form here.