Chancellor Jeremy Hunt unveiled a series of measures in the Autumn Statement 2023, aiming to “reduce debt, cut taxes, and reward work.” Here’s a breakdown of the key announcements:
Tax Changes
National Insurance Cut: The main rate of National Insurance will be reduced from 12% to 10%.
Abolition of Class 2 National Insurance: Class 2 National Insurance will be abolished, saving self-employed individuals an average of £192 per year.
Alcohol Duty Freeze: Alcohol duty will be frozen until August 2024.
Pensions and Benefits
Universal Credit and Benefits Increase: Universal credit and other benefits will increase by 6.7%, in line with September’s inflation figure.
State Pension Triple Lock: The state pension will increase by 8.5% from April 2024, resulting in a £220.20 weekly payment.
Living Wage Increase: The living wage will increase to £11.44 from April 2024.
Consultation on One Pension Pot for Life: The government will consult on reforms to allow individuals to have one pension pot for life.
Business Measures
Full Expensing Made Permanent: Companies can now deduct all spending on IT equipment, plant, or machinery from taxable profits.
Investment in Manufacturing and Artificial Intelligence: £4.5 billion will be invested in manufacturing up to 2030, and £500 million will be allocated to an artificial intelligence initiative.
Extension of Hospitality Industry Tax Relief: The temporary 75% business tax relief for the hospitality industry has been extended to 2025.
Accelerated Planning Applications: Reforms will allow local authorities to recover the full costs of major business planning applications for meeting faster timelines.
Property-Related Measures
Increased Local Housing Allowance: The local housing allowance will be increased, providing approximately £800 of support to 1.6 million households annually.
Permitted Development for House Conversions: Developers will be allowed to use permitted development to convert houses into two flats, provided the external appearance remains unchanged.
Impact of the Autumn Statement
The OBR (Office for Budget Responsibility) has revised its economic growth forecasts, projecting slower growth in 2024 and 2025 compared to previous estimates. Inflation is expected to remain elevated until 2024 before falling below the Bank of England’s 2% target in 2025.
The Autumn Statement is likely to have a mixed impact on individual finances, with some benefiting from tax cuts and pension increases, while others may face increased costs due to inflation and the stealth income tax freeze. Businesses, particularly in the manufacturing and hospitality sectors, are expected to benefit from the announced measures.
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