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LV= Summary of Autumn Statement 2023 – For UK Financial Advisers only

22/11/2023

The main measures announced in the Autumn Statement were tax breaks for business and reductions to National Insurance rates. This is in line with recent press speculation. While there had also been rumours about measures to reduce or reform IHT they were missing.  

Once you get into the detail there are also several welcome measures to simplify the administration of ISAs from 6 April 2024. It has also been announced that the digitalisation of Pension Tax Relief at Source has been put back to April 2027 at the earliest. It had been due to come in from 6 April 2025. 

This is a roundup of announcements that may be useful (or interesting).  All information is lifted directly from the Autumn Statement - related documents published by the government (relevant links below), including the government’s Autumn Statement 2023 ‘Green Book’.  

Headlines

  • National insurance – The main rate of national insurance for employees has been reduced to 10% from 6 January 2024. From 6 April 2024 the main rate for the self-employed will be reduced to 8% and they will no longer need to pay Class 2 national insurance. 
  • Abolition of the lifetime allowance – Measures to implement the previously announced abolition of the lifetime allowance will be included in the Finance Bill and come into force from 6 April 2024.
  • ISA simplification – While the ISA allowance are unchanged several measures have been announced that will simplify their administration from 6 April 2024. 
  • Pension triple lock - The Basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated by 8.5% in April 2024 in line with earnings growth. 
  • State benefits - The government is increasing working age benefits in line with inflation, measured by September CPI which is 6.7% this year.
  • National Living Wage/National Minimum Wage - National Living Wage will be increased from £10.42 to £11.44 an hour from April 2024. It will also be extended by reducing the age threshold from 23 to 21. National Minimum Wage for 18-20-year-olds will increase from £7.49 to £8.60 per hour. The apprentice rates and 16-17-year-olds rates will increase from £5.28 to £6.40 an hour. 
  • EIS and VCT - Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) extension – The government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses for the EIS and VCT from 6 April 2025 to 6 April 2035. 
  • Solvency II reform - The government announced reforms to Solvency II, the prudential regulatory regime for insurers, at Autumn Statement 2022. The government will be introducing secondary legislation to give effect to the reforms, delivering a more tailored, clearer, and simpler regulatory regime for the insurance sector, and incentivising private investment in long-term productive assets.
  • Pension pot for life - The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to have a “legal right to require a new employer to pay pension contributions into their existing pension".

Pensions and Pensions tax 

Removal of the Lifetime Allowance, and impact on PCLS (‘tax-free cash’)
5.47 LTA Abolition – The government will legislate in the Autumn Finance Bill 2023 to remove the Lifetime Allowance. The measure will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements. This will take effect from 6 April 2024.

Pension triple lock
3.48 The government is supporting pensioner incomes by maintaining the Triple Lock. 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% in the reference period. This means that the new State Pension will be worth up to £900 a year more.

Master Trusts Review
5.100 Master Trust Review – The government is publishing a review of the Master Trusts market, five years after the 2018 Master Trusts regulations came into force, including market trends and the future of regulation and supervision. 

Value for Money framework for defined contribution pensions
5.101 Update on implementing the Value for Money framework – The government welcomes the Financial Conduct Authority (FCA) and the Pensions Regulator (TPR) announcements on next steps towards implementing the Value for Money framework in the defined contribution workplace pensions market.

The FCA will consult on rules for contract-based schemes in Spring 2024, working closely with the government and TPR for consistency with the development of legislative requirements for trust-based schemes. In the meantime, actions from the TPR will strengthen their existing supervisory approach. 

Saver choice at retirement for members of occupational pension schemes
5.102 Update on saver choices at retirement – The government is publishing an update that proposes placing duties on occupational pensions trustees to offer decumulation services and products at an appropriate quality and price when savers access their pension assets, either themselves or through a partnership arrangement. It also sets out the intention to further explore the development and wider use of Collective DC schemes as part of a long-term vision for pension saving in the UK. 

Lifetime Provider Model and small pots 
5.103 Call for Evidence on Lifetime Provider Model and small pots consultation response – The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life, and on a potential expanded role for collective defined contribution (CDC) schemes in future. The government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000. 

Public consolidator for defined benefit (DB) pension schemes
5.104 Public consolidator for DB pension schemes – DWP will launch a consultation this winter on options for DB schemes, currently unserved by the market, to consolidate into a new statutory vehicle run by the Pension Protection Fund.

Solvency II Reform
5.105 Solvency II Reform – The government announced reforms to Solvency II, the prudential regulatory regime for insurers, at Autumn Statement 2022. The government will be introducing secondary legislation to give effect to the reforms, delivering a more tailored, clearer, and simpler regulatory regime for the insurance sector, and incentivising private investment in long-term productive assets.

Growth Fund
5.106 Growth Fund – Following positive feedback from industry, the government is confirming its intention to establish a Growth Fund within the British Business Bank. The Growth Fund will give pension schemes access to the BBB’s pipeline of opportunities, crowding private capital into the UK’s most promising businesses. 

Long-term investment
5.107 Long-term Investment for Technology and Science (LIFTS) – Subject to final agreement, the government will commit £250 million to two successful bidders under the LIFTS initiative. This will create new investment vehicles tailored to the needs of pension schemes, seeking to generate over a billion pounds of investment to support the UK’s most promising science and technology businesses. 

Pension investment expertise
5.108 Pension investment expertise and skills – The government supports the Pensions Regulator’s plans to implement a register of trustees to aid engagement with trustees and to update the trustee toolkit to include further information on productive finance.

Prioritising long-term pension investment
5.109 Prioritising long-term pension investment performance over low fees – Building on the guidance and commitments made by the Productive Finance Working Group, the government will engage with industry on proposals to ensure that all aspects of the pensions market are playing their part to support best outcomes for savers. This will include how to shift employer incentives away from low fees towards long-term pension investment performance. The Pensions Regulator will provide further information for employers on what factors should be assessed when they are selecting a pension scheme. 

Surplus arrangements for defined benefit (DB) pension schemes
5.110 Surplus extraction arrangements for DB pension schemes – DWP will launch a consultation this winter on the appropriate regime under which surpluses can be repaid and enabling 100% PPF coverage for DB schemes that opt to pay a higher levy. The authorised surplus payments charge will be reduced from 35% to 25% from 6 April 2024. 

Local Government Pension Scheme
5.111 Local Government Pension Scheme: Investment reform consultation response – Following consultation, the government confirms that Local Government Pension Scheme (LGPS) guidance will be revised to implement a 10% allocation ambition for investments in private equity, which is estimated to unlock £25bn, as well as a March 2025 deadline for the accelerated consolidation of LGPS assets into pools and setting a direction towards fewer pools exceeding £50bn of assets under management.      

Savings

Individual Savings Account (ISA) annual subscription limit
No change - The adult ISA annual subscription limit will be maintained at £20,000. 

Junior ISA and Child Trust Fund annual subscription limit 
No change - The annual subscription limit for Junior ISAs and Child Trust Funds will be maintained at £9,000. 

Measures to simplify the administration of ISAs
5.38 ISA: Allowing multiple ISA subscriptions – The government will allow multiple subscriptions to ISAs of the same type every year from April 2024. 

5.39 ISA: Allowing partial transfers between providers – The government will allow partial transfers of ISA funds in-year between providers from April 2024

5.40 ISA: Removing the requirement to reapply for an existing ISA annually – The government will remove the requirement to reapply for an existing dormant ISA from April 2024.

5.41 ISA: Expanding the Innovative Finance ISA to include Long-Term Asset Funds – The government will allw Long-Term Asset Funds to be permitted investments in the Innovative Finance ISA from April 2024. 

5.42 ISA: Expanding the Innovative Finance ISA to include open-ended property funds with extended notice periods – The government will allow open-ended property funds with extended notice periods to be permitted investments in the Innovative Finance ISA from April 2024. 

5.43 ISA: Allowing certain fractional shares contracts as a permitted investment – The government intends to permit certain fractional shares contracts as eligible ISA investments and will engage with stakeholders on implementation. 

5.44 ISA: Digitalise the ISA reporting system – The government is announcing the digitalisation of the ISA reporting system to enable the development of digital tools to support investors. 

5.45 ISA: Harmonise ISAs to those over 18 years of age – The government will harmonise the account opening age for any adult ISAs to 18 from April 2024.

UK Retail Disclosure Framework
5.117 UK Retail Disclosure Framework – The government has published a draft statutory instrument setting out how it will replace the retained EU law Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a new framework tailored to the UK. The accompanying policy note confirms the scope of the new framework, including its application to overseas funds, and sets out the government’s intention to fully resolve legislative issues with cost disclosure.

Real Estate Investment Trusts
5.71 Real Estate Investment Trusts (REITs) – Further to the publication of draft legislation on 18 July 2023, the government will make amendments to the rules for Real Estate Investment Trusts (REITs) to enhance the competitiveness of the regime. Changes will variously take effect from Royal Assent of the Autumn Finance Bill 2023, apply to accounting periods ending on or after 1 April 2023, or are deemed to have always had effect.

Enterprise Investment Schemes and Venture Capital Trust
5.76 Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) extension – The government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses for the EIS and VCT from 6 April 2025 to 6 April 2035.

National Insurance and National Living Wage

National Insurance
5.13 National Insurance contributions (NICs) rates – The government will cut the main rate of Class 1 employee NICs from 12% to 10%. This will take effect from 6 January 2024. 

The government will also cut the main rate of Class 4 self-employed NICs from 9% to 8%. This will take effect from 6 April 2024. From 6 April 2024 the government will also ensure that no one will be required to pay Class 2 self-employed NICs. Details of this change are: 

  • From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits including the State Pension.
  • Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs as they do currently. 
  • Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so. 

The government will set out next steps on Class 2 reform next year. As part of this reform the government will protect the interests of lower paid self-employed people who currently pay Class 2 NICs voluntarily to build entitlement to certain contributory benefits including the State Pension. 

National Minimum Wage/Living Wage Updating
5.14 National Minimum & Living Wage Uprating – From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. Young people and apprentices on the National Minimum Wage (NMW) will also see a boost to their wages.

Business taxes

Capital Allowances
5.62 Capital allowances: permanent full expensing – Full expensing will be made permanent in the Autumn Finance Bill 2023, so that investments made by companies in qualifying plant and machinery, after 1 April 2026, will continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first year allowance for special rate (including long life) assets. Cars, assets for leasing and second-hand assets will be excluded from these 100% and 50% first-year allowances.

OECD Pillar 2
5.70 OECD Pillar 2 – The government will introduce the Undertaxed Profits Rule, which forms part of the G20-OECD global minimum tax framework, in the UK for accounting periods beginning on or after 31 December 2024, with legislation included in an upcoming Finance Bill. It will also make technical amendments to the Multinational Top-up Tax and Domestic Top-up Tax legislation through the Autumn Finance Bill 2023.

A key part of the OECD/G20 BEPS Project is addressing the tax challenges arising from the digitalisation and globalisation of the economy. The global minimum tax, together with the Subject to Tax Rule, constitutes the second pillar of the Two-Pillar Solution developed to address those challenges.

The global minimum tax under Pillar Two establishes a floor on corporate tax competition which will ensure a multinational enterprise (MNE) is subject to tax in each jurisdiction at a 15% effective minimum tax rate regardless of where it operates, thereby ensuring a level playing field.

Social Security and Benefits

Supporting the long-term unemployed into work 

5.15 Restart scheme – The government is expanding its programme of employment support for the long-term unemployed for two years from 2024 across England and Wales. Those who have been on Intensive Work Search for 6 months will now be eligible, as opposed to the previous requirement of 9 months. In addition, work coaches will track the activity of participants to ensure they comply with requirements of the Restart programme. 

5.16 Post-Restart Claimant review point – From late 2024, Universal Credit claimants in England and Wales who have completed Restart and remain unemployed after 18 months will undergo a review conducted by a work coach. Claimants who do not agree to revised claimant commitments without a good reason, which could include attending a mandatory work placement or new intensive work search activities, will have their claim closed. 

5.17 Post-Restart employment schemes, including Mandatory Work Placements – From late 2024, the government will begin rolling out new schemes to support Universal Credit claimants in England and Wales, who have completed Restart and remain unemployed after 18 months. Following the post-Restart claimant review point, claimants will be mandated to attend a time-limited work placement or undertake other intensive work activity. 

5.18 Additional Jobcentre Support – The government is expanding Additional Jobcentre Support currently live in 90 Jobcentres in England and Scotland to trial intensive support for people who have been receiving Universal Credit for 7 weeks, in addition to the support after 13 and 26 weeks announced at Spring Budget 2023.

5.19 Strengthening the application of Universal Credit sanctions – The government is investing in digital tools that will allow work coaches to track claimant attendance at job fairs and interviews organised by a Jobcentre Plus in Great Britain

5.20 Closing claims for disengaged UC claimants on open-ended sanction for over 6 months – The government will take steps to close the claims of sanctioned Universal Credit claimants in Great Britain who have not engaged with Jobcentre support for over 6 months and are solely eligible for the Universal Credit standard allowance.

5.21 Investigating sanctioned claimants through the Targeted Case Review – The government will use its Targeted Case Review process to investigate sanctioned Universal Credit claimants in Great Britain who have not engaged with Jobcentre support for over eight weeks who are still receiving some Universal Credit payments, ensuring they receive the right entitlement. 

Supporting the long-term sick and disabled into work. 

5.22 Individual Placement and Support expansion – The government will expand access to Individual Placement and Support (IPS) for severe mental illness, an employment support service within community mental health teams in England, to reach an additional 100,000 people over the next 5 years.

5.23 NHS Talking Therapies expansion – The government will expand access to NHS Talking Therapies in England, the flagship NHS programme for treating mild and moderate mental health conditions, to reach an additional 384,000 people over the next 5 years, and increase the number of sessions available to those that use the service. 

5.24 Universal Support expansion – Universal Support is a supported employment programme in England and Wales for people with a disability or health condition. The government will double the number of yearly places on Universal Support to 100,000

5.25 Occupational Health – The government will establish an expert group to develop a voluntary minimum framework which will set out the minimum level of Occupational Health intervention that employers could adopt to help improve employee health at work. 

5.26 Work Capability Assessment (WCA) gateway reform – The government is reforming the activities and descriptors in the Work Capability Assessment for new claimants in Great Britain, to support more people into employment, with implementation occurring from 2025. 

5.27 Fit note reform – The government will explore end-to-end reforms of the fit note process to support more people to resume work after a period of illness. Trailblazer trials, in a small number of areas in England, will test changes to make referrals to health and employment services easier and improve digital access for patients. They will include trigger points for referrals for people who have received a fit note for a prolonged period of time and new designs of the fit note form. The government will launch a consultation in 2024 on wider reforms, to examine providing individuals whose health affects their ability to work, with easy and rapid access through the fit note process to specialised support for a return to work.

Supporting vulnerable people

5.28 Raising Local Housing Allowance (LHA) rates – In April 2024, LHA rates in Great Britain will be raised to the 30th percentile of local market rents.

5.29 Uprating of benefits – The government is increasing working age benefits in line with inflation, measured by September CPI which is 6.7% this year. The government is also maintaining the Triple Lock. The basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with earnings growth. This is measured by the usual metric of annual earnings growth in May-July, which is 8.5% this year. Over 19 million families will see their benefit payments increase from April 2024. Some disability benefits are devolved in Scotland, so it is for the Scottish Government (SG) to decide uprating. Department for Work and Pensions (DWP) benefits are fully devolved in Northern Ireland, so it is for the Northern Ireland Executive to decide uprating in Northern Ireland. 

5.30 DWP: new powers to tackle fraud and error – The government is legislating to give DWP further access to claimant data to better identify fraud and error in the welfare system in Great Britain.

Legislation

Many of the required changes will be included in the Spring Finance Bill 2024, which will be published in March 2024, or by Treasury Order.  As usual, however, the Chancellor's Budget statement will include resolutions made under the Provisional Collection of Taxes Act 1968 for any measures that are expected to come into effect ahead of Finance Bill Royal Assent. 

Links to further information

Autumnal sun shine off water and fallen autumn leaves of a water feature in the business district of London Bridge in south east London England UK.