On Wednesday, 22nd November 2023, Chancellor of the Exchequer Jeremy Hunt delivered his Autumn Statement to confirm the government’s spending plans for the year ahead. The announced measures are designed to “raise business investment, get more people into work, reduce inflation next year and increase GDP,” according to Hunt. Additionally, the proposals mark “the biggest tax cut in modern British history.”
Hunt’s statement follows a period of significant economic challenge for the UK, in which inflationary pressures have been rife. However, the Office for Budget Responsibility (OBR) predicts a more favourable fiscal outlook, noting that the economy has proved more resilient than initially expected. Specifically, the OBR expects the economy to grow 0.7% in 2024, doubling to 1.4% in 2025, and inflation to drop to 2.8% by the end of 2024.
Measures Announced
The following measures were outlined during Hunt’s speech:
Personal Taxes
- Class 2 National Insurance contributions will be abolished, saving approximately £192 per year for self-employed individuals.
- Class 4 National Insurance contributions —paid by the self-employed on profits between £12,570 and £50,270—will be cut from 9% to 8% from April 2024.
Business Support
- The previously introduced business “full expensing” scheme will be made permanent. The scheme enables businesses to write off the entire cost of spending on new machinery and equipment while saving on other investment types.
- The 75% discount on business rates has been extended for another year for retail, hospitality and leisure businesses.
- Funding to the tune of £4.5 billion over the next five years has been promised to attract investment into strategic manufacturing sectors.
- Three additional investment zones will be set up—in the West Midlands, East Midlands and Greater Manchester—expanding on previously announced “levelling up” Additionally, a second investment zone will be set up in Wales.
- Alcohol duty will be frozen until 1st August 2024 to help businesses in the wine and spirits industry.
Pensions and Benefits
- Universal Credit and other working-age benefits will increase by 6.7% from April 2024 to support those on the lowest incomes.
- The Local Housing Allowance Rate will increase to the 30th percentile of local market rents, creating an additional £800 for some households next year.
- The introduction of a new Back to Work Plan, supported by more than £2.5 billion in funding, will support and incentivise unemployed Universal Credit claimants to find work.
Other Measures
- The “national living wage” will rise to £11.44 an hour from April 2024. The new rate will apply to anyone 21 years old and over.
- A pledged £7 million in funding will tackle antisemitism in schools and universities.
Conclusion
The proposals set out in the government’s Autumn Statement aim to grow the economy, attract investment, keep inflation falling and bring people back to work.
However, the newly announced measures will affect individuals and businesses. As such, it’s wise to fully understand any potential ramifications by reading the Autumn Statement in full on the government’s website.
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