Autumn Statement: No IHT reform but tax cuts announced

hm treasury

The Chancellor’s second Autumn Statement was presented with a slightly less dramatic backdrop than his first, which swiftly followed Trussonomics.

Nevertheless, the economy still remains challenging and there looms the possibility of a general election next year.

There had been much speculation that a change to the inheritance nil rate band would be announced – given that it has stood at £325,000 since 2008 and is due to remain frozen until 2028. These predictions did not come to fruition but it is the type of vote-winning good news that could be announced in the spring Budget.

Instead, Jeremy Hunt announced measures which he believed would deliver ‘the biggest business tax cut to Britain, ever’. He revealed the abolition of Class 2 NICs for the self-employed, normally paid on profits above the current lower profits limit of £12,570. The rate of Class 4 NICs for the self-employed will reduce from 9 per cent to 8 per cent in April 2024.

Employed workers will also see a decrease in their national insurance, down from 12 per cent to 10 per cent from January 2024. The timing of this tax change is unusual as most are adopted at the start of the tax year – further prompting speculation that it signals the timing of a general election.

There was a win for those buying assets for their businesses under the measure known as ‘full expensing’. This allows companies to deduct capital spending from taxable profits and was previously due to expire in 2026 but now becomes permanent. The policy centres on expenditure on plant and machinery but can include IT equipment for example.

The government confirmed that both start-up investment programmes, the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT), are to be extended to 2035.

In a boost to personal savers, there will no longer be a limit on the number of ISAs that investors can support from April – although the contribution limit will remain at £20,000 per year. New rules will allow transfers between ISAs and the inclusion of ‘illiquid assets’ such as property and private equity – but we await further details on this.

Approver Quilter Financial Services Limited and Quilter Mortgage Planning Limited 09/02/2024

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