Autumn Statement 2023: Key Points

It was no surprise that the tone of the Autumn Statement was much lighter than that of last year.

In the run up to Election time, this may have been the Conservative Party’s last chance to sway those on-the-fence voters.

With the polls taking a downward turn for them, Jeremy Hunt had to pull out some uplifting initiatives to help them take the lead.

Let’s take a look at the key points and how they affect you.

Cost of Living Support

The chancellor started off by reflecting on the decrease in the rate of inflation in the economy currently, having reduced from 11.1% last October to 2.4% as of last week.

Nevertheless, as an aim of providing further support to families suffering the cost of living, he announced the following:

• Universal Credit and other benefits will be raised by 6.7%, benefitting 5.5 million households an average of £470 per year.
• The National Living Wage for workers aged 21 and over will increase to £11.44 from April next year.
• For renters on benefits, Local Housing Allowance (LHA) will be unfrozen, meaning 1.6 million families will be £800 better off next year.
• The state pension will be increased by 8.5% next year.

There was no mention of any additional support or extensions to existing support regarding energy prices.

Whilst the Energy Price Cap reduced from October 2023, it is expected to rise again from January 2024.

Perhaps the next Spring Budget will provide support in this area.

Employees

It was announced there would be reduction in the rate of Class 1 National Insurance paid by employees from 12% to 10%.

This change will be sped through red tape and so from 6 January 2024, all employees should see a slight increase in their monthly take home pay.

For a worker earning £30,000 a year, monthly take home pay will increase by £29.04.

Self Employed

Class 2 National Insurance will be abolished from April 2024 – this is currently charged at a flat rate of £3.45 per week.

The rate of class 4 national insurance will also be cut from 9% to 8% from 6 April 2024.

The combined effect will leave the average individual £350 better off each year.

Businesses

With a major focus in the Autumn Statement being stimulating growth in the economy, the Chancellor announced the following initiatives to aid businesses:

• A ‘new, simpler’ tax relief for research and development will combine the existing R&D Expenditure Credit and SME schemes. This new merged scheme will also cut the rate at which a loss-making company are taxed from 25% to 19%.
• Full expensing will be permanent – full tax relief on new plant and machinery will no longer be capped at the £1 million Annual Investment Allowance for businesses.
• The current 75% discount on business rates for firms in retail, hospitality and leisure will be extended for another year.
• All alcohol duty will be frozen until August 2024.
• It was hinted that creative industry tax credits, such as for the film industry, would be made more beneficial but no expansion on this was offered.

Property

• A reform to the planning application process for new infrastructure projects, with new statutory timescales and increased incentives for local authorities to speed up the process.
• A consultation has been announced on a new Permitted Development Right. Essentially it is proposed that planning permission will be granted for any house to be converted into two flats as long as the exterior remains unchanged.

Commentary

With much build up in the press and rumours of this Autumn Statement bringing the ‘largest tax cuts in 50 years’, yesterday’s announcements were somewhat underwhelming.

Inheritance tax was amongst the most popular predictions, with reports that the nil rate band would be made higher, or the tax being abolished altogether, however there was not a single mention of IHT.

Cuts to National Insurance will be a welcomed announcement for both employees and the self-employed, but there was little in the way of support for small business.

Full expensing being made permanent was heavily emphasised by the Chancellor, however smaller businesses who don’t invest over £1 million in new machinery every year will see no change to their tax bill.

National insurance for employers remains largely unchanged and no announcements with regards to the rate of Corporation Tax were made.

With Corporation Tax now on a sliding scale from 19% to 25%, and with National Insurance now lower for those self-employed, the benefits of incorporating have become further diminished and it may be worth many small to mid-sized companies disincorporating.

With an election on the horizon, we’ll have to sit tight and wait to see what the Spring Budget next year brings…

If you have any concerns or questions about anything announced in the Autumn Statement, then please get in touch with your account manager who would be happy to discuss it with you.

The content in this blog is correct as at 23rd November 2023. See terms and conditions.