2023 Autumn Statement – Update Roberts Boyt Limited’s Summary

2023 Autumn Statement – Update Roberts Boyt Limited’s Summary

Date: 11 December 2023 | By: robertsb
  • The UK Economy is forecast to grow by 0.7% in 2024 (down from the 1.8% growth previously forecast);
  • UK debt is forecast to be 94% of GDP by 2028 (it is currently 97.8% of GDP);
  • 2% of UK GDP is to be spent on NATO and National Defence commitments;
  • UK inflation is becoming stickier than originally forecast and is now not expected to fall to the 2% target rate until 2025;
  • The OBR is forecasting UK inflation to be 2.8% pa in 12 months’ time (i.e., by the end of 2024);
  • Currently CPI is running at 4.8%, although that is not ‘core’ inflation and food and energy inflation remain high;
  • The Government has promised £7 million to tackle antisemitism;
  • Businesses will be able to reduce Corporation Tax by investing in machinery, equipment and information technology;
  • The Basic State Pension (including the New State Pension and Pension Credit) is due to increase by 8.5% with effect from 6th April 2024 (to £221.20 per week) as a result of the ‘triple lock’ Government guarantee;
  • The National Living Wage will increase to £11.44 per hour (from £10.42 per hour);
  • Universal Credit and Disability Benefits are to increase by 6.7% (based on the higher September CPI rate);
  • Local Housing Allowance to rise to 30% of local market rents with effect from 6th April 2024;
  • Employees Class 1 National Insurance contributions are to be reduced by 2% from 12% to 10% with effect from 6th January 2024. Those are paid on earnings between £12,571 pa and £50,270 pa (and 2% on earnings above that UEL);
  • Hand-rolled tobacco will increase by 10% but the duty on Alcohol and Beer is frozen;
  • ISAs subscription limits remain unchanged, however;
  • The Government intends to simplify how ISAs work and widen the scope of what an OISA can invest in;

From 6th April 2024:

  • Multiple subscriptions will be allowed in each tax year to ISAs of the same type;
  • Where an existing ISA has received no subscription in the previous tax year, the requirements to make a fresh application for the current year will be removed;
  • Partial transfers of current tax year subscriptions between providers will be allowed;
  • To widen the scope of investments long term asset funds (LTAFs) will be permitted in the innovative finance ISA (an IFISA, that can include P2P loans);
  • Open-ended property funds with extended notice periods to be permitted investments in the IFISA;
  • The Government will engage with the finance industry on allowing certain fractional shares contracts to become permitted ISA investments;
  • HMRC plans to continue to consult and move to a digital system that reflects the needs of ISA providers and investors;
  • The Government announced that Help to Save Scheme is to be reformed.
  • The Lifetime Allowance (LTA) will be abolished (as expected) with effect from 6th April 2024. The measures will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the treatment of overseas pensions, transitional arrangements, and reporting requirements;
  • The maximum Pension Commencement Lump Sum (PCLS) for those without protections will be kept at 25% of the fund up to a maximum of £268,275 (i.e., 25% of the LTA of £1,073,100). That figure will be frozen at that thereafter;
  • The tax-free portion of a trivial commutation lump sum, winding up lump sum and small pots lump sum will not be deducted from the new thresholds, although an individual must have available scope within the thresholds to be able to take those lump sums;
  • The LTA excess lump sum will be removed in the absence of the LTA. In its place a PC ‘Excess’ LS will be introduced, and payment of which will be taxed at the individual’s marginal rate of income tax;
  • For those with valid Enhanced Protection, the tax-free portion of any serious ill health lump sum of lump sum death benefit will be limited to the total value that could have been paid under that arrangement on 5th April 2024. The marginal rate of income tax will then be applied on any excess;
  • On death before age 75, beneficiary drawdown plans and beneficiary annuities will continue to be excluded from income tax, as is currently the case;
  • In order to allow for benefits taken before 6th April 2024 a transitional calculation will; be provided where so individuals can calculate their available lump sum allowance and lump sum and death benefit allowance;
  • Where someone has already used 100% of their LTA, they will have exhausted their allowances and the transitional calculation will not apply;
  • A new ‘overseas transfer allowance’ will be introduced for transfers to qualifying recognised overseas pension schemes (QROPS), which will be equal to the level of an individuals lump sum and death benefit allowance of £1,073,100;
  • Where the total value of an individual’s transfers from registered pension schemes to QROPS exceeds their available allowance, the excess will the subject to the overseas transfer charge, i.e., 25% of the transfer amount.

Mark Howse, Senior Financial Planner at Roberts Boyt Limited – 29th November 2023

This is Roberts Boyt Limited interpretation of the measures introduced by The Chancellor of the Exchequer, The Rt Hon Jeremy Hunt MP on 22nd November 2023. Errors and omission excepted.