Autumn Statement 23: An Autumn Statement for Growth
On Wednesday 22 November the Chancellor, Jeremy Hunt, announced the Autumn Statement. This is the tax and spending plan for the year ahead. In a cost of living crisis, and the economy on the edge of a potential recession, politically the pressure is on.
The government promised to half inflation by the end of the year, and that appears to be on track. This time last year inflation was 11.1% and has now dropped to 4.6%. More interest rate increases may be ahead as The Bank of England has a target of 2% so the pain may not yet be over.
The focus is on growth and investment.
Here is our plain English overview of the main issues announced which will impact you.
National Living Wage
The National Living Wage has been in place since 2010, helping those on low pay.
Currently £10.42 an hour for workers over 23 years, this will be increased to £11.44 in April 2024. This is the biggest ever annual increase and worth £1,800 a year for a full-time worker.
Furthermore, the age limit for this rate will drop to 21 years. This means that a 21-year-old will get a 12.4% increase, from £10.18 to £11.44, worth £2,300 for a full-time worker.
18 -20-year-olds will have an increase from £7.49 to £8.60. Apprentices will also see an increase of 20% from £5.28 to £6.40 an hour.
National Insurance
- Employed
National Insurance is paid if you're 16 or over and are either: an employee earning more than £242 per week from one job. self-employed and making a profit of more than £12,570 a year. The National Insurance rate you pay depends on how much you earn and is made up of 12% of your weekly earnings between £242 and £967 (2023/24).
The main rate of National Insurance for employees is being cut by 2%. This results in 27 million people benefiting. Those on the average salary will save £450 per year.
This will start from January 6th 2024 NOT April 2024.
- Self-Employed
The Chancellor went further for the self-employed abolishing Class 2 National Insurance completely for those who are self-employed, impacting 2 million people.
Class Four National Insurance, paid on earnings between £12,570 and £50,270, will be cut from 9% to 8%.
Both these changes will take place from April 2024.
Back to Work
There is a real focus on getting people back to work.
- Veteran Employment Support
£ 10 million investment as part of the Veteran Employment Support Scheme.
- Skills
Apprenticeships increased in engineering and related industries, with an investment of £ 50 million. 9 million adults with low literacy skills will be helped, and new standards have been introduced for maths and English for school leavers.
- Planning Process
Faster processes for major business planning applications and relaxed planning processes will be introduced for certain residential developments to speed up the process, to generate jobs.
- Benefit Reform
Currently, there are 7 million adults not working despite jobs being available. Support will improve around mental health treatment and stricter sanctions introduced for benefits claimants.
After 18 months of receiving support, job seekers who have not found work will need to attend compulsory, voluntary experience, to improve skills. If the job seeker does not comply for six months, benefits will stop.
SME assistance
- Payment Terms
30-day payment terms will automatically apply to the sub-contract supply chain whatever size of business
- Business Rates
The 75% discount on business rates up to £110,000 for retail, hospitality and leisure will continue for another year.
The Small Business Multiplier will be frozen for another year.
Hunt says these measures will save the average independent shop over £20,000 and the average independent pub over £12,800 next year.
Business Investment
Business investment plans were announced to position the UK as an innovative leader and maintain a strong competitive position. With a focus on the green energy sector, innovation centres, cars, aerospace, and pharmaceutical sectors.
Hunt commented that the UK would become an “AI powerhouse” with £500m to fund innovation centres.
Levelling Up measures
Four further investment zones were announced in the Midlands, Greater Manchester, and Wales with the tax benefits for investment extended from five years to ten years.
Business Tax
Hunt announces the largest business tax cut in modern history – increasing annual investment by £ 3 billion a year expected. This will be achieved by making the “full expensing” for businesses a permanent measure: for every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.
This is a big benefit for manufacturers.
Freeze on alcohol duty remains in place to support hospitality and pubs.
Cost of Living help
Whilst not directly impacting your finances as a business owner, it will impact your employees and customers so worth a quick note here:
Increases in housing allowances and universal credit are just two of the initiatives of the £ 104 billion help to households in response to the cost of living crisis.
Hunt also confirmed that the triple lock would remain in place for state pensions, meaning an 8.5% in April 2024 giving an extra £990pa to pensioners.
This was a complex statement with some big investment programmes. If you are interested in reading impartial facts, the full statement is available on the Gov.uk website.
If you have any concerns about your commitments, your business or your financial security, please do give us a call.