Autumn Statement 2023

autumn statement

Earlier today, Chancellor Jeremy Hunt delivered the Autumn Statement 2023. He began by stating that the economy had performed better than expected and that “real” income had increased. As a result, he announced 110 measures in the Autumn Statement that aim to drive growth.  We were thankful that he did not go into each and every one of those 110 measures today.

Mr. Hunt stated that the Office for Budget Responsibility (OBR) has lowered growth forecasts for the coming years. The OBR figures are:

  • 0.6% growth this year (in March 2023 the expectation was 0.2% fall)
  • 0.7% growth in 2024 (in March 2023 the expectation was 1.8% growth)
  • 1.4% growth in 2025 (in March 2023 the expectation was 2.5% growth)

The OBR’s downward revision of growth projections has prompted the Chancellor to encourage businesses to invest and to reward hard work. To help achieve this, he has announced the following measures:

Changes to Personal Tax including the Self-Employed

  • The rates for Basic and Higher Personal Tax remain unchanged.
  • Millions have been dragged into higher tax brackets as income tax thresholds remain frozen. There was no change announced in the Autumn Statement.
  • There was a reduction in the main rate of National Insurance (NIC) by 2% making the new rate 10% from January next year.
  • The Class 2 National Insurance (currently £179.40 per year) is abolished from the next tax year. This is paid by the self-employed making sufficient profits.
  • The self-employed will also see a fall in their Class 4 National Insurance (normally paid with Self-Assessment Tax) from April 2024 as the main rate will be reduced by 1% to 8%.
  • The option to pay for voluntary class 3 NIC will continue at a rate of £3.45 per week.

Changes to Business Tax

Jeremy Hunt has introduced a permanent tax break allowing immediate tax relief for all capital expenditure, including investments in machinery, IT, and other equipment.

You no longer have to wait to claim relief over the life of an asset.

For most SME’s this announcement is not going to make any difference because currently, £1 million worth of capital expenditure qualifies for relief in the first year.

Other Announcements

  • The State Pension will increase by 8.5% next April to 221.20 per week.
  • Universal Credit and disability benefits will increase by 6.7%.
  • National Living Wage to increase from £10.42 to £11.44 per hour. The rate will apply from age 21 (currently age 23).
  • Local Housing Allowance rates to be increased.
  • There will be a consultation on workplace pension and in particular if employees get to pick their own pension pot. Currently too much money is wasted in charges for multiple pots.

What happens next?

Throughout this week, we plan to delve deeper into the 110 measures that were announced and provide additional information on the specifics. Next week, we will revisit this topic and offer more details.

However in the meantime should you have any questions, please get in touch with your normal manager.

If you are not yet working with us, why not look at how we work and see we can help you.

You can also find the full details of today’s Autumn Statement here