“Stability, Growth and Public Services”: A round up of the Autumn Statement
In today’s Autumn Statement the Chancellor Jeremy Hunt largely reversed that of his predecessor and outlined his three priorities: stability, growth, and public services. In a budget that aimed to provide a balanced path back towards stability, the Chancellor focused on taxing those that contribute more, investing in our public services and boosting growth.
In the below we have pulled together the key announcements.
Stability
With inflation rising to 11%, interest rates being hiked and GDP growth falling, the Chancellor had the unenviable task of balancing the books. With the announcements below, forecasts show a shallower downturn than previously predicted.
- Those earning £125,140 will now start paying the top rate of income tax, brought down from £150,000.
- Income tax personal allowance and higher rate thresholds will be frozen for a further two years, until April 2028.
- National Insurance and Inheritance Tax thresholds will also be frozen for a further two years.
- The National Living Wage is to be increased to £10.42 for over 23-year-olds from April next year.
- The tax-free allowances for dividend and capital gains tax is due to be cut next year and in 2024.
- State pensions will continue to be uprated by the inflation rate (10.1%), as will means-tested benefits.
- The Stamp Duty cut announced in the last Budget will now only be temporary until 31 March 2025.
- Electric cars will now be subject to Vehicle Excise Duty from April 2025.
Growth
A focus on long term growth, innovation and stability formed the second part of the Chancellor’s speech, with announcements on the UK’s net zero ambitions, support for businesses and infrastructure developments.
- A windfall tax on the profits of oil and gas firms will increase from 25% to 35% and be extended until March 2028. The government has also introduced a temporary 45% levy on electricity generators.
- Business rates will be reduced, providing £13.6bn of support for businesses over the next 5 years. For more information on the business rates package, click here.
- The government is also setting the Annual Investment Allowance at its highest ever permanent level of £1m from April 2023.
- Reforms of R&D reliefs are also underway. From the 1 April 2023 the Research and Development Expenditure Credit (RDEC) rate will increase from 13-20%, the SME additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. Public spending on R&D will increase to £20 billion a year by 2024-25, a cash increase of around a third compared to 2021-22.
- The second round of the Levelling Up Fund will allocate at least £1.7bn to priority local infrastructure projects.
- The government has also recommitted to the Glasgow Climate Pact and announced the go-ahead of a new nuclear power plant.
Public Spending
Whilst much of the budget was focused on balancing the books and the repayment of money borrowed during the pandemic, the Chancellor also acknowledged that public services in the UK required more support.
- The NHS Budget in England is to be increased in each of the next two years by an extra £3.3bn.
- Schools in England will get an extra £2.3bn annually for the next two years.
- Defence and overseas aid spending is set to be maintained this year
For more detail of the Autumn Statement and what it might mean for your business, we’ve included some helpful links below: