Contrary to speculation, the Chancellor announced no reforms to Inheritance Tax (IHT) or ISA allowances, during the Autumn Statement last November. However, some changes to ISAs were proposed, including the ability for people to pay into multiple ISAs of the same type each tax year and permitting partial transfers of ISA funds between providers, from April 2024.
As a reminder:
- Inheritance Tax bands remain at £325,000 nil-rate band, £175,000 residence nil-rate band, with taper starting at £2m – fixed at these levels until April 2028
- The 2024/25 tax year ISA allowance remains at £20,000 and the JISA (Junior ISA) allowance remains at £9,000.
In its latest analysis, presented during the Statement, the Office for Budget Responsibility (OBR) predicted economic growth of 0.7% in 2024 and 1.4% next year. Jeremy Hunt outlined 110 growth measures intended to reduce business taxes, get more people into work and raise business investment, in order to get the economy “back on track.”
Personal and business taxation measures
The headline personal taxation measure was the reduction in the main rate of Class 1 employee National Insurance contributions (NICs) from 12% to 10%, which will provide a tax cut for 27 million working people. This took effect from 6 January 2024. Self-employed people will also benefit with Class 2 NICs paid by those earning more than £12,570 being abolished from April and Class 4 NICs paid on profits between £12,570 and £50,270, to be cut by one percentage point to 8% from April 2024.
A key business-related measure was making the full expensing tax break for businesses permanent, at a cost of £11bn a year. The Chancellor said this represents, “the largest business tax cut in modern British history.”
Pension update
Some good news was bestowed upon pensioners, as the government confirmed its commitment to the pensions Triple Lock. This means that the basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with average earnings growth of 8.5% (September 2023). In addition, the new State Pension will increase in April 2024 from £203.85 per week to £221.20 per week, while the basic State Pension will rise from £156.20 to £169.50 per week.
The latest steps to deliver the Mansion House Reforms previously outlined by the Chancellor, include a call for evidence on allowing individuals to consolidate pensions by having one pension pot for life.
The Lifetime Allowance (LTA) is still scheduled to be abolished from April 2024.
And more positivity…
One of the growth measures focused on the future of Enterprise Investment Schemes (EISs) and Venture Capital Trusts (VCTs). A ten year extension has been granted to the operation of VCT and EIS schemes from April 2025 to April 2035, continuing the availability of Income Tax and Capital Gains Tax reliefs for investors in qualifying companies and VCTs.