Individuals who hoped for significant reform to inheritance tax will likely be disappointed by the Autumn Statement.
IHT was not mentioned at all in the chancellor’s speech and did not feature in the related documents subsequently published on the government website.
The big tax announcement affecting individuals was the reduction in the rate of national insurance contributions. For employees, the main rate of employee Class 1 NICs will reduce from 12 per cent to 10 per cent from January 6, 2024. There is no change to the employer’s Class 1 rate.
For the self-employed, the main rate of Class 4 NICs reduces from 9 per cent to 8 per cent, and Class 2 NICs will be abolished, both from April 6, 2024. The annual saving from the NICs reduction may be up to £754 for employees and £556 for the self-employed.
Individuals who do not currently pay NICs, such as pensioners, unincorporated landlords and investors will not see any benefit from the NICs cut.
Despite no mention of Isas in the chancellor’s speech, several changes relating to Isas were announced in supporting documents.
The various Isa allowances will remain unchanged in the next tax year, meaning they will have remained the same for eight years, but there will be some additional flexibility around transfers between Isas, and opening multiple Isas of the same type in the same year.
The fact that the chancellor is comfortable that the NICs cut, which will put more cash into the hands of 30 million taxpayers, will not compromise his inflation targets probably speaks volumes about the impact of the increasing overall tax burden on individuals, caused by several years of frozen tax bands and allowances.
It looks like individuals will need to get to terms with IHT and income tax rates and allowances remaining as they are at least for now.
Using Isa and pension allowances may become increasingly important, particularly with the capital gains tax annual exemption and dividend allowance both set to be halved from April 6, 2024.
Matthew Todd is associate director at RSM
