Autumn Statement – a summary from our Tax Partner
By Ian Kelly, November 2023
Just over a year after his inaugural Autumn Statement, Chancellor of the Exchequer Jeremy Hunt delivered his second on 22 November 2023 which he opened with a title for the said Autumn Statement, “An Autumn Statement for Growth”.
One was immediately transported back to the Liz Truss/Kwasi Kwarteng Mini Budget from September 2022 which had as its centrepiece the heading, “The Growth Plan” and which came off the rails pretty quickly.
Hunt had a variation on a theme though and built on his 110 measures underpinning his speech by saying these would “Help grow the economy”, one which was already seeing lower borrowing; debt and inflation.
Hunt was delivering on the back of a fall in the inflation rate to 4.6% in October which, he said, delivered the halving of inflation rate promise. I read somewhere during the week that Hunt and Rishi Sunak had distanced themselves from the dramatic increase to double-figure inflation and so they could hardly claim the credit for the fall.
The Autumn Statement had been tipped as the first of two pre-General Election Budgets but it fell some way short and so Hunt will return to the dispatch box, presumably next March, ahead of a May, or a November election.
Some of the main points of interest were:
- Working age benefits from 1 April 2024 will increase by the September inflation figure of 6.7%
- The National Living Wage will increase by 9.8% to £11.44 from 1 April 2024 with the age threshold cut by two years from 23 to 21
- The pension triple-lock remains in place meaning the basic State Pension; the new State Pension and Pension Credit being uprated from 1 April 2024 by 8.5%
- The self-employed scored highly by virtue of the abolition of the weekly Class 2 National Insurance contribution and a 1% reduction to 8% in the Class 4 National Insurance contribution
- The main rate of employee Class 1 National Insurance is cut from 12% to 10% effective from 6 January 2024
- As leaked ahead of the Autumn Statement, full expensing for companies introduced for three years from 1 April 2023 will now become permanent providing for, and continuing from 1 April 2026, a full writing off of qualifying plant and machinery in year and the continuation of the 50% first-year allowance for special rate assets. There will be a technical consultation on whether there should be an extension of full expensing to leasing
- A business rates support package will see the small business multiplier frozen for a fourth year and retail, hospitality and leisure relief extended. Whilst the standard rate multiplier will be increased by CPI inflation, increasing bills for some businesses, it is hoped this will be counter-balanced by the permanent full expensing
- Following on from the merging , from 1 April 2024, of the existing Research and Development Expenditure (RDEC) and SME schemes, there will be a note setting out the key changes to the policy following the publishing of a technical consultation
- The rates of van benefit and car and van fuel benefit charges for the year ending 5 April 2024 will continue for the year ending 5 April 2025
- There will be a reform to the Construction Industry Scheme whereby VAT will be included as part of the gross payment status compliance test and a technical consultation on simplification to other aspects of the scheme
With the chance of tax cuts said to be remote in the run-up to this Autumn Statement, Hunt could only work around the periphery, keeping his powder dry for a bigger stage in 2024.
Those elephants in the room in the form of frozen tax allowances and rates; the potential abolition of Inheritance Tax; the aligning of income tax and capital gains tax rates and the alleviation of the Child Benefit High Income Charge will be around for a little while yet.