Cylchlythyr Misol Tachwedd 2023
- ENCOURAGING developments
- For employees, the Class 1 National Insurance Contributions (NICs) rate will be cut from 12% to 10% from 6 January 2024. An average employee on a salary of £35,400 will receive an annual tax cut of £450.
- For the self-employed, two major changes to NICs from April 2024:
- Class 2 NICs to be abolished: previously, this was a flat rate NIC payment payable by all self-employed individuals earning profits of more than £12,570.
- Class 4 NICs rate reduced from 9% to 8%: this is payable on self-employed profits between £12,570 and £50,270.
These two changes will lead to a tax saving of c.£350 for an average self-employed individual earning profits of £28,200.
- Universal Credit and other working-age benefits to increase by 6.7% from April 2024.
- The State Pension will increase by 8.5% from April 2024, worth an additional £900 a year for those on the new State Pension.
- National Living Wage will rise from £10.42 to £11.44 from April 2024.
- Companies who invest in machinery & equipment will continue to be able to deduct these costs in full against corporation tax, now on a permanent basis.
- All alcohol duty frozen until 1 August 2024, with tobacco duty increasing by 2% above inflation and hand-rolled tobacco duty increasing by 12% above inflation.
- DISCOURAGING developments
- Living standards are expected to fall again this year and are not expected to return to pre-pandemic levels until 2027-28.
- No change to income tax personal allowance and higher rate tax thresholds, with no increases due until 2028. As wages rise, everyone will pay more tax.
- Although employee NICs have been cut, there is no change to the Class 1 NIC rate payable by employers, which remains at 13.8%.
- Additional funding for HMRC's Debt Management team, reflecting the reality that individuals may find it difficult to keep up with tax payments in the coming years as the pressures from the cost-of-living crisis remain.
We will continue to keep you updated on significant tax changes and Government announcements!
