The Chancellor of the Exchequer, Jeremy Hunt, presented his Autumn Statement to The House of Commons today (Wednesday the 22nd of November 2023). Our latest article highlights the key announcements made in the Autumn Statement.
Overview of the Autumn Statement
The Office for Budget Responsibility (OBR) predicts an average inflation rate of 2.8% by the end of next year and 2% by 2025. The UK will see an overall growth in 2023 of 0.6%, and an economic growth of 0.7% is expected in 2024. The independent forecaster expects debt will increase as a percentage of Gross Domestic Product (GDP), the measure of everything produced in the economy.
Today, Jeremy Hunt delivered his Autumn Statement to The House of Commons, and part of the Chancellor’s package includes 110 measures to boost economic growth, including business tax cuts.
To read the full Autumn Statement, please visit the government’s website.
What were the Chancellors’ key announcements in the Autumn Statement?
As part of the Autumn Statement, the Chancellor set out the government’s spending and tax plans for the year ahead. Here is a summary of the main announcements.
Minimum Wage
The minimum wage (or national living wage) will rise to £11.44 per hour from April – an increase of £1.02 per hour. The rate will now apply to Britons aged 21 or over, decreasing the eligible age from 23. For anyone under 21, the minimum wage is lower but also increasing. If you are 18 to 20, you will get at least £8.60 per hour from April. For those aged 16 and 17 and apprentices, the minimum pay will be £6.40.
Taxes
The main rate of National Insurance will be cut from 12% to 10% from the 6th of January, which will impact around 27 million people. In April, the Chancellor announced he will abolish Class 2 National Insurance for self-employed workers. Meanwhile, he will also cut Class 4 National Insurance from 9% to 8% on earnings between £12,570 and £50,270 for self-employed individuals.
Pensions
State pensions to increase by 8.5% from April, in line with average earnings. This means an increase to £221.20 a week and almost an extra £900 yearly. The triple lock will also be honoured in full. Jeremy Hunt also announced a consultation on whether savers should get the right to pick the pension scheme their employer pays into and to establish a pension pot for life scheme which workers can pay into as they move throughout their working life.
Benefits
In line with the September inflation rate, benefits will increase by 6.7%, which will come into effect from April.
Jeremy Hunt announced that he would increase the local housing allowance to the 30th percentile of local market rents, giving around 1.6 million households an average of £800 support next year.
The Chancellor reiterated the government’s plans to remove benefits and monitor welfare recipients to bring more people into work. The Work Capability Assessment will be reformed to consider the availability of home working after the COVID-19 pandemic.
Jobseekers will have benefits such as legal aid and free medicines removed if they’re found not to be looking for work under the Back to Work Plan, which aims to bring 1.1 million people back into work.
Business Support
A further £500 million will be invested over the next two years to fund further “innovation centres to help make us an AI powerhouse”, Mr Hunt announced. Additionally, a “new, simplified” tax relief for research and development will combine the existing R&D Expenditure Credit and SME schemes. Jeremy Hunt announced that, through the new merged scheme, he will also cut the rate at which loss-making companies are taxed from 25% to 19%.
The full expensing scheme – currently due to expire in 2026 – will be made permanent. The full expensing scheme allows companies to write off the entire cost of spending on new equipment and machinery while also saving 25p from every £1 spent on other types of investment.
The 75% discount on business rates, a tax paid on non-domestic properties of up to £110,000, will be extended for another year. This applies to firms in retail, hospitality and leisure.
Financial incentives for investment zones and tax reliefs for freeports extended from five years to ten years, with new investment zones announced for the West Midlands, East Midlands and Greater Manchester, as well as Wrexham and Flintshire.
Other Measures
- All alcohol duty is frozen until the 1st of August 2024
- Fuel duty remains at 52.95p per litre for petrol and diesel after the Chancellor announced a 5p per litre cut for 12 months in March
- The duty rate on tobacco products increases by 2% above RPI inflation; hand-rolling tobacco rises 12% above RPI
- Up to £3 million for Tackling Paramilitarism Programme in Northern Ireland
- Up to £7 million over the next three years for organisations like the Holocaust Educational Trust to tackle antisemitism in schools and universities
- Funding for £5 million for Imperial College and Imperial College Healthcare NHS Trust to set up Fleming Centre to work on health innovations
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