UK Chancellor’s Autumn Statement Highlights
According to the Institute for Fiscal Studies, UK tax levels are at their highest since records began 70 years ago. After the usual speculation in the press over the last week, we learned today from Chancellor Jeremy Hunt in his Autumn Statement mini-budget whether there would be any tax cuts.
There were no proposed changes to Inheritance Tax despite comments in the press that there would be. This was picked up on by Rachel Reeves, the Shadow Chancellor, who asked whether this was a “decision delayed or a decision abandoned.” However, National Insurance rates were reduced which will represent a tax cut for many individuals.
Outlined below are some of the proposed key changes set out by the Chancellor in his speech that will be relevant to individuals’ personal taxes.
Class 2 National Insurance paid by employees is currently charged at 12% on earnings between £12,571 and £50,271 and 2% on anything above that. The Chanceller announced he wants to reduce the 12% rate 10% and, further, he wants to bring this in earlier than would be otherwise expected from 6th January 2024.
Class 2 National Insurance for self-employed individuals will be abolished, “saving the average self-employed person £192 a year.” Class 4 National Insurance will also be cut from 9% (on earnings between £12,570 and £50,270 for 2023/24) to 8%.
The Chancellor said he would consult on giving pension savers a “legal right to require a new employer to pay pension contributions into their existing pension.” By way of general comment, there can be US disclosure requirements in respect of non-US pensions and consideration should be given to the US tax treatment of employer contributions with potential US-tax planning opportunities. US citizens should ensure that their non-US financial accounts and assets are reported correctly.
For many Americans living in the UK, the UK will continue to drive their overall tax exposure as the UK’s tax rates are generally higher compared to the US federal rates. Therefore, it is as important as ever for people with dual US/UK tax exposure to seek advice to manage their tax positions. To achieve this we also work closely with investment and wealth managers as well as other advisors to help our clients deal with the implications of being US and UK taxpayers.
It was also worth noting that in her reply to the Chancellor’s speech, Rachel Reeves attacked the fact the “non-dom” regime had not been changed. This is good news for many UK taxpayers who benefit from the Remittance Basis. However, it should be noted that Labour have said they would change the non-dom rules if they come to power which would have a significant impact for many Americans and other non-domiciliaries living in the UK.
If you would like to discuss how the changes outlined in today’s Autumn Statement might impact your tax position or if you would like to discuss you US/UK tax situation generally please contact us.