Chancellor Jeremy Hunt delivered the Autumn Statement today, providing an update on the economy and outlining the Government’s plan for growth. To help you understand the announcements, Jack Parker, Associate Director at Bevan Buckland LLP, has summarised the main points of the Statement in plain terms.
The Main Announcements
Inflation and economic growth: The Office for Budget Responsibility (“OBR”) has predicted an average inflation rate of 2.8% by the end of 2024, reducing to the Government’s target of 2% by 2025.
The OBR states that “overall” UK economic growth in 2023 is 0.6%; it is predicted to rise to 0.7% in 2024, and to double to 1.4% in 2025.
Minimum wage: The National Living Wage will increase from £10.42 to £11.44 per hour from April 2024. Additionally, this rate will apply to those aged over 21, instead of those aged over 23.
The National Minimum Wage (“NMW”) for those aged 18 to 20 will rise to £8.60 an hour from April, and for 16 and 17-year-olds, and apprentices, the NMW will increase to £6.40.
Benefits: Benefits will increase by 6.7%, coming into effect in April.
The Chancellor also announced that he will increase the local housing allowance rate to the 30th percentile of local market rents, which he says will give 1.6 million households an average of £800 support in 2024.
Furthermore, the Back to Work Plan has been announced which aims to bring 1.1 million people back into work. The plan will see jobseekers lose benefits such as free medicines and legal aid if they are found not to be looking for work.
Taxes: The main rate of National Insurance for employees will be cut by 2% from 12% to 10%, taking effect from 6th January 2024.
There are also plans to reform National Insurance for the self-employed, with the Chancellor stating that this will save approximately 2 million people an average of £350 per year.
Class 2 National Insurance is being abolished, said to save £192 a year for the self-employed, and the main rate of Class 4 National Insurance will be reduced from 9% to 8%, which applies to profits between £12,570 and £50,270.
Pensions: The triple lock will be “honoured in full”, meaning that State Pension payments will rise by 8.5% to £221.20 a week, totalling almost £900 extra per year.
Business Support: Over the next two years, an additional £500 million will be invested to fund further innovation centres to “help make us an AI powerhouse”.
It was also announced that the existing R&D Expenditure Credit and SME schemes will be combined in a “new, simplified” tax relief for research and development. Within that scheme, the Chancellor stated that there will also be a cut to the rate at which loss-making companies are taxed, decreasing from 25% to 19%.
The full expensing scheme will be made permanent, allowing businesses to write off the entire cost of spending on new machinery and equipment, saving 25p from every pound spent on asset investment.
Additionally, there will be a business rates discount for hospitality retail and leisure worth £4.3 billion.
Other: All alcohol duty will be frozen until August – meaning no increase in duty on beer, cider, wine or spirits.
To try and reduce the time it takes for planning applications to be granted for businesses, the Chancellor will allow local authorities to recover the full costs of major business planning applications if they meet guaranteed faster timelines. However, if the local authorities fail to meet these guarantees, the business will be refunded in full and have their planning application processed free of charge.
Get in touch
If you have any questions or need advice following the changes announced, one of our Bevan Buckland LLP advisors will be happy to assist. Simply get in touch on 01792 410100 or by email.