To say it’s been a tumultuous few months in the government is something of an understatement.
The majority of Truss and Kwarteng’s mini-budget of 23rd September has already been reversed by the new Chancellor, Jeremy Hunt. But on 17th November, Hunt took things a step further in his much-anticipated Autumn Statement—the goal of which is to stabilise the economy, reduce inflation and tackle the escalating cost of living crisis.
This replacement budget comes against a bleak economic backdrop. The Office for Budget Responsibility (OBR) deems the UK to be in recession, meaning the economy has slowed for two quarters in a row—and experts predict that we’re heading into the longest recession on record. Inflation also reached 11.1% yesterday, the highest it has been in over 40 years.
The Autumn Statement, which Hunt prefaced by saying it required “difficult decisions”, will affect the take-home pay and household budgets of millions of people in the UK. As a sole trader or unincorporated landlord, there are a number of things that will have both a direct and indirect impact on you (or your clients).
Below, we’ve summarised what that you need to know.
Hunt stated that his financial plans will require “those who earn more, to contribute more”. As such:
- The income tax Personal Allowance threshold will be frozen until April 2028. This means that taxpayers will pay more tax on their income over time, as the Personal Allowance will not increase in line with wages.
- The threshold at which the highest earners will start paying the top rate of tax is also being reduced from £150,000 to £125,140. This means that those earning £150,000 or more will pay just over £1,200 more in taxes per year.
For reference, here are the current self-employed tax rates for 2022/23.
- The government will use the September Consumer Price Index (CPI) figure of 10.1% to increase Class 2 NIC rates for the 2023-24 tax year. The Class 2 rate will be £3.45 per week.
- The main National Insurance and inheritance tax thresholds will also be frozen until April 2028, with the same consequences as with income tax.
Kwarteng’s mini-budget raised stamp duty thresholds for people buying property in England and Northern Ireland as follows (these changes came into effect immediately):
- No stamp duty is payable on the first £250,000 of a property’s price (vs the previous threshold of £125,000)
- For first-time buyers, that threshold rises to £425,000 (vs £300,000).
In a bid to stimulate the property market during the recession, Hunt announced that these stamp duty cuts will remain in place, but only until 31st March 2025.
Other announcements made in the budget that may have an indirect impact on self-employed people and landlords include:
- Help with energy costs has been extended for all households, but at a less generous level than previously—meaning that many will still face higher bills.
- Electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
- The national living wage will be increased to £10.42 from April 2023.
- The government has retained the state pension triple lock—meaning that state pension will increase in line with inflation*
- Tax-free allowances for dividend and capital gains tax will be cut next year and in 2024.
The reversal of IR35 reforms, new VAT-free shopping scheme for non-UK visitors and the freeze on alcohol duty rates announced in the mini-budget will also no longer go ahead.
*Under the triple lock, state pension is supposed to increase each year in line with whichever of the following three measures is highest:
- inflation, as measured by the Consumer Prices Index (CPI) in September of the previous year
- the average increase in wages across the UK
- or 2.5%