Against a backdrop of reducing inflation and greater headroom for spending, the Chancellor announced several tax cuts and boosts to business in his ‘Autumn Statement for Growth’.
Self-employed individuals
Several measures were announced which benefit self-employed individuals.
The main rate of Class 4 NICs payable on self-employed profits between £12,570 and £50,270 will be reduced from 9% to 8% from 6 April 2024. In addition, Class 2 NICs payable by self-employed individuals with profits in excess of £12,570 will be abolished from 6 April 2024. Further reforms to Class 2 NIC are expected for those lower paid self-employed individuals who currently pay voluntary contributions.
Changes to self-employed NICs are expected to benefit around two million self-employed individuals and will result in an average self-employed person on £28,200 saving £350 in 2024/25.
The cash basis of accounting will become the default method for businesses from 2024/25. The turnover, interest and loss relief restrictions that currently apply to the cash basis will be removed.
Making Tax Digital (MTD) for Income Tax Self Assessment will be simplified. This is expected to benefit approximately 1.7 million businesses and landlords.
HMRC will also rewrite guidance around the tax deductibility of training costs for sole traders and the self-employed to provide more clarity to businesses on what costs are deductible.