The Autumn Statement

We had a fairly flat and disappointing Autumn Statement in November, with no increases to the basic rate bands to help soften the cost of living but a small win for the self-employed sole traders or partnership businesses. They will benefit from a 1% reduction in Class 4 National Insurance Contributions (NICs) on amounts earned between £12,570 and £50,270 from 6 April 2024. Class 2 NICs will also be abolished. However, those with profits of less than £6,725 per individual will still need to pay voluntary Class 2 NICs to maintain their rights to state pension.

There are similar reductions to NICs for employees but by 2% from 12% to 10%,so those running their businesses through a limited company and are paid a salary might benefit from this. However, most owner-managed companies tend to extract profits primarily through dividends and loan accounts rather than salaries, so their position is effectively unchanged.

Whilst full expensing was made a highlight of the budget, allowing those investing in plant and machinery to receive 100% tax relief on the purchase, this is of little benefit for those businesses who spend less than £1M a year as this will continue to be covered by the annual investment allowance. Full expensing is also only available to limited companies.

There was also no further guidance or changes to legislation to ensure continued relief on land which currently qualifies for agricultural property relief for inheritance tax purposes but will come out of agricultural production for environmental use. The lobbying and pressure on Government will need to continue through further consultations.

We have another budget in the spring so lets hope for some better news then.