Autumn Statement - PwC comments on personal tax changes and National Insurance Contribution cuts

Today the chancellor announced the abolition of Class 2, a 1 percentage point reduction of Class 4 and a 2 percentage point reduction of Class 1 employee National Insurance Contributions.

Christine Cairns, tax partner at PwC, says:

“The cut to employee NIC functions as a significant and welcome 2% cut to income tax within the band affected. Its introduction three quarters of the way through the tax year is an unusual step that will be welcomed by those who benefit although it could cause an administrative headache for payroll operators.

“Notwithstanding the cuts, significantly there were no increases to any tax thresholds, meaning the effects of fiscal drag will continue to bite, offsetting in part the savings achieved.

“Contrary to speculation that there may be good news for savers, there will be no changes to current ISA limits which will be maintained for 2024-25.”

Alex Henderson, tax partner at PwC, adds:

“Despite expectations in some quarters there wasn’t anything in the Chancellor’s speech about IHT or other capital taxes. But he did highlight an interest in ‘non-inflationary tax cuts’ and brought in his first changes from January; this could suggest that today’s Autumn Statement is part one of a two-stage Budget with more to come in March.”