Chancellor Jeremy Hunt delivered his Autumn Statement last week. Setting out the governments tax and spending plans for the year ahead, below is a summary of the key announcements.
Taxation & Wages
- From 6 January 2024, the main rate of National Insurance will be cut from 12% to 10%. This will affect 27 million people
- The Class 2 National Insurance that is paid by self-employed people that earn more than £12,570 will be abolished from April 2024
- The Class 4 National Insurance for self-employed people paid on profits between £12,570 and £50,270 to be cut from 9% down to 8% from April 2024
- The National Living Wage, (legal minimum wage), will increase from £10.42 to £11.44 an hour from April 2024
- The National Living Wage rate will apply to 21 and 22 year old workers as well, instead of just those age 23 and over
Benefits & Pensions
- From April 2024, in line with September’s inflation rate, universal credit and other working-age benefits in England and Wales will increase to 6.7%
- The Local Housing Allowance rate, which is used to measure the level of housing benefit and universal credit people receive to pay rent, is to be unfrozen and increased to 30% of local rents from April 2024
- The Work Capability Assessment is to be revised following the Covid-19 pandemic to reflect the availability of remote and home working
- Over the next 5 years there will be funding of £1.3bn to help people with health condition find jobs
- An additional £1.3bn of funding will help people who have been unemployed for over a year
- Claimants in England and Wales deemed able to work who refuse to seek employment will lose access to their benefits and extras, such as free prescriptions
- In line with average earnings, the state pension payments will increase to 8.5% from April 2024
- Workers will receive the right to nominate the pension pot to which their employer contributes, effectively giving them the option to have one pension pot for life
Economy & Public Finances
- The Chancellor aims to boost economic growth with 110 measures
- The Independent Office for Budget Responsibility (OBR) predicts the economy to grow by 0.6% this year, 0.7% the following year, then rise to 1.4% in 2025, 2% in 2027 and 1.7% in 2028
- Inflation is forecast to fall to 2.8% by the end of 2024, on course for the Bank Of England’s 2% target rate in 2025
- The pre-pandemic living standards levels are not projected to return until 2027/28
- The underlying debt is forecast to be 91.6% of GDP next year, then 92.7% in 2024/25, 93.2% in 2026/27, then declining to 92.8% in 2028/29
- Borrowing is expected to fall from 4.5% of GDP in 2023/24 to 3% in 2024/25, then 2.7% in 2025/26, 2.3% in 2026/27, 1.6% in 2027/28 and 1.1% in 2028/29
Business & Infrastructure
- A full expensing tax break will be made permanent. This will allow companies to deduct expenditure on new machinery and equipment from profits
- Leisure, hospitality and retails firms have had their 75% business rate discount extended by another year
- Households that are situated close to new pylons and transmission infrastructure to receive up to £1,000 a year off energy bills for the next decade
- Across England there will be new premium planning services promising faster decision dates for business applications, will fee refunds provided when these are not met
- There will be £4.5bn of funding to attract investment to strategic manufacturing sectors, such as aerospace, green energy, life sciences and zero-emission vehicles
- There will be £500m of funding over the next 2 years for artificial intelligence innovation centres
- New investment zones have been announced for the West Midlands and East Midlands, as well as Greater Manchester, Flintshire and Wrexham. The financial incentives for these zones and tax reliefs for freeports has been extended from 5 years to 10 years
- To fund regeneration projects in Scotland, there will be £80m for new Levelling Up Partnerships
Government Spending
- The previous commitments made in last years autumn statement were reiterated – to provide £14.1bn for the NHS and adult social care in England, with an extra £2bn for schools as well for both 2023/24 and 2024/25
- Scotland, Wales and Northern Ireland will get equivalent funding
- OBR warns that due to higher inflation the real value of departmental budgets will be £19bn lower by 2027/28 compared with March forecasts
- It is a Nato commitment that defence spending remains at 2% of national income
- Overseas aid spending remains at 0.5% of national income, which is below the official target of 0.7%
Other Measures
- All alcohol duty frozen until 1 August 2024
- Tobacco products duty rate increases by 2% above RPI inflation, and hand-rolling tobacco rate rises to 12% above RPI
- Fuel duty wasn’t addresses so therefore it remains at 52.95p per litre for petrol and diesel, following the chancellors March announcement of 5p per litre cut for the subsequent 12 months
If you have any questions about the chancellor’s autumn statement, or if there is anything you would like to discuss in further detail, please contact SFB on 03333 444 171 or enquiries@sfb.group.
