The Chancellor of the Exchequer, Jeremy Hunt, delivered the Autumn Statement to the U.K. Parliament on 22 November 2023.1 The Autumn Statement was focussed on measures to improve productivity.
From a global-mobility perspective, the most important announcement was a reduction in the rate of National Insurance for employees from 12% to 10%, taking effect from 6 January 2024.
For employers of globally-mobile employees there is always a great deal of interest in the U.K.’s fiscal events as they can have a direct impact on the cost of assignments.
The specific impact of the Autumn Statement’s measures will depend on each taxpayer’s particular set of circumstances. However, in most instances, we expect that an employee’s U.K. tax burden for 2024/2025 should remain relatively stable; with a slight reduction for those individuals liable to U.K. National Insurance, who will see a reduction in their National Insurance contributions of up to £754 per year.
Although there were rumours prior to the Autumn Statement of potential changes to the UK’s non-domicile tax regime, no announcements were made in respect of this.2
It is essential to get in front of the changes described in this newsletter and to communicate quickly and clearly with key stakeholders, so that they can properly plan, budget, and make any necessary adjustments.
The Chancellor had previously announced at the 2022 Autumn Statement that the personal allowance and income tax higher rate threshold would be frozen until April 2028, and this was followed by the reduction in the threshold of the 45% additional rate band, decreasing from £150,000 to £125,140 from 6 April 2023.3
No further announcements were made in respect of changes to the tax rates nor the thresholds. Hence, applicable tax rates and thresholds for the 2024/25 tax year will be as follows:
Current | 2024/25 Tax Year |
|
| Rate | Threshold |
Personal Allowance | 0% | £12,570 |
Basic rate | 20% | £0 - £37,700 |
Higher rate | 40% | £37,701 - £125,140 |
Additional rate | 45% | Over £125,140 |
Source: KPMG LLP (U.K.)
Scotland
The 2024/25 tax rates for Scottish taxpayers will be presented to the Scottish Parliament on 19 December 2023.4
Wales
The Welsh Senedd sets income tax rates for Welsh taxpayers. The draft budget will be published on 19 December 2023.5
The Chancellor announced that the Class 1 NIC rate for employees between the Annual Threshold and the Upper Earnings Limit will be reduced from 12% to 10%, with effect from 6 January 2024. The rates for employer National Insurance are unchanged.
As previously announced, the National Insurance thresholds will remain frozen at their current levels until April 2028.
| 2024/25 |
Annual Threshold for employee NIC | £12,570 |
Annual Threshold for employer NIC | £9,100 |
Upper Earnings Limit | £50,270 |
| 2023/24 | 2024/25 |
Class 1, 1A and 1B NIC rate for employers on earnings above the Annual Threshold | 13.8% | 13.8% |
Class 1 NIC rate for employees between the Annual Threshold and Upper Earnings Limit | 12% until 5 January 2024 10% from 6 January 2024 | 10% |
Class 1 NIC rate for employees above the Upper Earnings Limit | 2% | 2% |
Source: KPMG LLP (U.K.)
Additionally, the Chancellor announced that Class 2 National Insurance contributions, currently paid by self-employed individuals at a rate of £3.45 per week if they earn over £12,560 a year, will be abolished and the Class 4 rate for self-employed individuals will reduce from 9% to 8% with effect from 6 April 2024.
Some UK-outbound assignees are eligible to pay voluntary Class 2 National Insurance contributions to retain their entitlement to some contributory benefits. The Chancellor has confirmed that these individuals will continue to be able to make voluntary contributions, and these will remain at a rate of £3.45 per week.
1 Slovak Income Tax Act. no 595/2003 Coll.
2 Income tax related to CFC rules (from companies in low tax jurisdictions). This may be an important change for expatriates who have shares in foreign companies who will no longer be subject to taxes levied on unpaid income.
The information contained in this newsletter was submitted by the KPMG International member firm in Slovakia.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2024 KPMG Slovensko Advisory k.s., a Slovak limited partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
1 For the U.K. government’s Autumn Statement 2023, click here. For coverage and analysis of the Autumn Statement 2023 by KPMG LLP in the U.K., click here.
2 For KPMG LLP in the U.K.’s Autumn Statement Predictions, published prior to the Autumn Statement, click here.
3 For coverage by KPMG LLP in the U.K. of the Autumn Statement 2022, see GMS Flash Alert 2022-208 (18 November 2022)
4 For the announcement of the date of the 2024-25 Scottish Budget, click here
5 For the Welsh government Draft Budget timetable for 2024-25, click here.
6 For coverage by KPMG LLP in the U.K. of the Spring Budget 2023, see GMS Flash Alert 2023-058 (16 March 2023)
7 For coverage by KPMG LLP in the U.K. on the ending of Portugal’s Non-Habitual Residnts regime, see GMS Flash Alert 2023-204 (2 November 2023). For coverage by KPMG in the Netherlands on planned changes to the Dutch 30% ruling, see GMS Flash Alert 2023-203 (2 November 2023). For coverage by KPMG in Italy on changes to the Italian Expatriate Regime, see GMS Flash Alert 2023-202 (1 November 2023).
The information contained in this newsletter was submitted by the KPMG International member firm in the United Kingdom.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2024 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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