Chancellor Jeremy Hunt gives an “Autumn Statement for growth”, delivering “the biggest business tax cut in modern British history”

Streets Whittles partner Dan Insley reviews the key findings of the Autumn Statement.

In his Autumn Statement, Jeremy Hunt, Chancellor for the last 13 months, applauded the fact that the three financial pledges made as part of Prime Minister Rishi Sunak’s five priorities for 2023, have all been achieved: inflation has been halved, the economy has grown, and debt is reduced. However, the tone, although congratulatory, remained very much that there was still more to do and addressing a country moving ever closer to a general election, the Conservative Chancellor was forward-looking with renewed promises to unlock investment, reward work and effort and to continue to grow the economy.

110 measures were promised in yesterday’s Autumn Statement with perhaps the major announcement, saved for a flourishing finale, being the cut to employee National Insurance rates. This will be reduced from 12% to 10% and if two percentage points was not dramatic enough, the start date was not to be in line with the tax year but to begin as soon as the 6th January. The reduction promises to save a worker on the average £35,000 salary £450 a year.

This reduction in employee NI rates followed on from the earlier announcement of reduced NI rates for the self-employed. From  6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs but will continue to receive access to contributory benefits including the State Pension. In addition, the rate of Class 4 self-employed NICs will be reduced from 9% to 8% from 6‌‌‌ April‌‌‌‌‌‌ 2024. These concession will mean that around two million people are expected to save on average £350 a year.

NI cuts may be the headline theme of the day, however, topically, Hunt’s first announcement was to pledge £7m to tackle the current increase antisemitism. “When it comes to antisemitism, and all forms of racism, we must never allow the clock to be turned back,” he said. This plea was made before Hunt returned to the fiscal staples of pensions, benefits and the living wage.

The decision to honour the pension triple lock “in full”, brought cheers. This means that the full new state pension is increased by 8.5% to £221.20 a week, worth up to £900 more a year. Benefits will also increase next year by 6.7%, which is the inflation rate for September but with an eye on the promise to reward effort, welfare recipients will be made to undertake a mandatory work placement if they are still looking for a job after 18 months. For those aged 21 and over, the National Living Wage will increase by 10 per cent from £10.42 to £11.44 an hour; worth £1,800 a year for the average full-time worker. £50m funding was also announced for apprenticeships in engineering and other “key growth sectors where there are shortages”.

Other investment promises included £500m over the next two years to fund more “innovation centres” to help make the UK an “AI powerhouse” and funding and tax breaks for investment zones and freeports.

It was good news for FSB members with the announcement that there will be a freeze on the small business multiplier for a further year and the 75% discount on business rates up to £110,000 discount for retail hospitality and leisure businesses was also extended for  another year. This will be welcome news for Publicans alongside the confirmation that whereas tobacco duty is up, alcohol duty is frozen until next autumn.

There was also a boost for businesses which invest heavily in equipment in that “full expensing” for businesses was made permanent. This means that for every £1 invested in IT, machinery and equipment, a business can claim back 25p in corporation tax. Hunt has called this the “largest business tax cut in modern British history”, claiming “it means we have not just the lowest headline corporation tax rate in the G7 but its most generous capital allowances.”

Other measures included a £110 million investment in schemes tackling nutrient neutrality, which the Chancellor said should produce an additional 40,000 homes over the next five years; another £450 million will be allocated to the Local Authority Housing Fund to deliver 2.400 new homes. There were incentives for households living near new power cables to be offered electricity bill discounts to speed up construction of the required networks, plans to launch a sale of NatWest shares over the next 12 months and a promise of a consultation on pension pot reforms.

110 is an impressive number of measures and the volume intended no doubt to be uplifting. The Conservative fiscal message going into the next election is clear: their “plan for the British economy is working. But the work is not done.”

If you would like to discuss how this Autumn Statement might impact on you and your business, please get in touch with me Dan Insley, or any of my partners at Streets Whittles or the wider Streets Chartered Accountants

For further information, members of our Tax Practice and our Financial Services arm have produced a webinar on the Autumn Statement which you can access by registering here.