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In last week's Autumn Statement the Chancellor, Jeremy Hunt, announced some welcoming news for self-employed workers and contractors, with a couple of significant tax breaks. Here is a summary of the main headlines. for businesses.
Class 2 National Insurance which is paid by self-employed people earning over £12,570 is to be abolished from April 2024.
Class 4 National Insurance, also for self-employed people and paid on profits between £12,570 and £50,270 is to be cut from 9% to 8% from April 2024.
The main rate of Class 1 employee NICs will be reduced by 2%, from 12% to 10%.
This is estimated to positively affect the take home pay for 27 million working people, earning £35,400 annually. They would receive an additional £450 in 2024/25.
The reduction in NIC tax is estimated to have a £10.4bn cost for the Government, by 2027/28. That said, these reductions in NIC contributions may be cancelled out by the recent rise in cost of living. It's important to remember that there was no increase to the personal allowance (the amount you can earn before tax is due) or the thresholds for income tax, which affects Sole Traders, or dividend tax, for limited company contractors.
The Chancellor has also announced an increase in the National Living Wage from £10.42 an hour to £11.44 an hour. This will apply to workers aged 21 and above, compared with the 23+ threshold, previously applied.
From April 2024, the Government will increase in state pension payments by 8.5% to £221.20 a week, which translates to £900 annually.
The 75% discount rate for the retail hospitality and leisure sectors will be extended until 2025.
During the next two years, the government will invest £500m in "innovation centres" to turn the UK into an "AI powerhouse".
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