As the Office for Budget Responsibility announces that it now considers the UK to be in recession, we review the outcome of today’s autumn statement and its impact on the UK workforce.
Income tax:
- The threshold at which the highest earners start to pay 45% income tax (the ‘additional rate’) will be reduced from £150,000 to £125,140.
- The income tax personal allowance, basic and higher rate thresholds will be frozen until April 2028 (previously frozen until April 2026).
National Insurance:
- The main national insurance thresholds have also been frozen until April 2028 (previously frozen until April 2026). The temporary 1.25%-point increase in national insurance rates was reversed from 5 November 2022 so this will remain at a 12% contribution for employees and a 13.8% contribution for employers for those making category A national insurance contributions.
Wages:
- The National Living Wage will be increased from £9.50 per hour to £10.42 per hour for those over-23 years of age from April next year. This will affect 2,000,000 people.
Forecast:
- It is anticipated that unemployment will rise from 3.6% to 4.9% in 2024.
- Ministers will have to scrutinise the recommendations for public sector pay rises, such as salary increases for teachers, nurses and the armed forces. Ongoing and widespread disputes are expected.
If you are concerned about the outcome of the autumn statement and the potential impact of this on your workforce, please contact any member of the employment and HR team here.
Our recent blog on how employers can support their employees with the cost-of-living crisis can be found here.
For more information on industrial action, join our webinar on 1 December 2022, the details of which are here.
