As a business owner or manager within the Care Industry, you most likely have a keen interest in the recently announced Autumn Statement for 2023. However, at present, it is initially unclear which policies and changes will actually affect you and your business. As Cleva is advised by leading industry professionals, we are here to help translate the jargon by providing our first ever Autumn Statement Care Industry Summary!
How Will The Autumn Statement Impact My Elderly Care Clients?
Your clients’ pensions may not instantly come to mind when considering the impacts of the Autumn Statement – but it has been confirmed that those receiving a Pension will see a change in their policy from the 6th April 2024.
Pensions Lifetime Allowance
This policy existed to limit the amount of tax-free money that a person could take from their pension, which was previously just over 1 million pounds. For pensions taken before the 6th April 2023, any money beyond this maximum would have incurred a 55% taxation if taken as a lump sum, or a 25% taxation if taken any other way. The Pensions Lifetime Allowance is getting replaced. After the 6th April 2024, the amount that can be taken out as a tax-free lump sum will quarter to £268,275. If the person dies before the age of 75, the maximum tax free lump sum will now be £1,073,100. These pension changes may change how a client pays for their care, so it is important to discuss this with their loved ones if affected.
How Will The Autumn Statement Impact My Care Company’s Finances?
As an employer, your PAYE contributions will change when concerning Off-Payroll workers (also known as IR35). Off-Payroll workers are classified as employees, meaning they aren’t self-employed. Examples of Off-Payroll agreements include agencies and partnerships that provide a service to your business. Most importantly, the worker must have a say in the service they provide in order to qualify. If you have previously paid such workers as ‘self-employed’, then this new legislation will reduce the PAYE contributions paid. The legislation will also take into account previous PAYE contributions, and will take effect fully from 6th April 2024. The aim of the policy is to share the cost between the deemed employer and the worker. Therefore, retention of such partnerships will naturally increase as a result.
The majority of National Insurance taxes will remain unchanged or improved until 2027, which is great news across the board.
Coming into effect from 6th January 2024, National Insurance will reduce from 12% to 10%, meaning employees could receive up to £450 of additional income a year. As well as this, there will be a reduction from 9% to 8% for the self-employed. As a result, employers should see a staff retention increase as well as in job satisfaction. Not only will this satisfy existing employees, the industry should also see an increase in applicants due to increased wages.
HMRC Data Collection Increase
Employers will now collect more information via PAYE, and will come into effect from 2026. You will be asked for details such as hours paid, dividend income and the percentage share from shareholders. With an increased demand on admin, the benefits of a streamlined payment solution are unmatched. In a recent survey, Cleva users saw an average administrative saving of 70 minutes per client per week. Cleva is an invaluable investment for your future accounting practises! Learn more about how Cleva could work for your business today.