Key Autumn 2023 Announcements

The Chancellor, previously adamant about the near impossibility of tax cuts just two months ago, appears to have had a change of stance. Aligning with the Prime Minister, Mr. Hunt implied that halving inflation in 2023 marked a turning point in the economy, allowing for a new policy direction.

Outlined below are the primary updates and revisions unveiled by the Chancellor in the 2023 Autumn Statement.

Preferring short-term tax reductions over future government spending, the Chancellor's focal changes involved reducing the national insurance rate and establishing permanent full expensing for eligible corporate investments in plant and machinery.

Key highlights encompass:

• Decreasing the main rate of Class 1 employees' NICs from 12% to 10% starting January 6, 2024. The main rate of Class 4 self-employed NICs will drop from 9% to 8% beginning April 6, 2024, coinciding with the abolition of Class 2 NICs. Nonetheless, the Chancellor noted voluntary contributions will still be available for maintaining contribution records. The Chancellor stated the changes to NICs will save around 2 million people an average of £350 per year with the abolishing Class 2 NI, saving £192 a year - for the self-employed.
• Permanent establishment of full expensing for qualifying plant and machinery investments by companies, which will be implemented post-April 2026 that allows for full in year write-off of such expenditure at the Corporation Tax rate.
• Maintaining the freeze on income tax allowances and rate thresholds (fiscal drag) until 2028, enabling government tax revenues to increase in the forthcoming years as average wages rise. The national insurance contribution thresholds and inheritance tax nil rate bands for 2024/25 will also remain unchanged.
• The Chancellor announced The triple lock will be "honoured in full", resulting in a 8.5% increase for state pension and pension credit for 2024/25. In monetary terms that is a rise to £221.20 a week for state pensions, worth almost an extra £900 a year. Universal credit and most other benefits will increase by 6.7%, in line with CPI inflation up to September 2023.
• Investors will be allowed to subscribe to multiple ISAs of the same type from April 2024. Partial ISA transfers between providers will also be permitted.
• A 9.8% increase in the national living wage to £11.44/hour has also been announced.

The Chancellor has also announced a series of investments and new reliefs for companies that will be made including:

• A further £500m over the next two years to fund further "innovation centres" to help make the UK an AI powerhouse
• A "new, simplified" tax relief for research and development, combining the existing R&D Expenditure Credit and SME schemes. The scheme will result in a cut in the rate at which loss making companies are taxed from 25% to 19%.
• The 75% discount on business rates (the tax paid on commercial properties) of up to £110,000 for firms in retail, hospitality and leisure will be extended for a further year.
• All alcohol duty will be frozen until August 2024. That means no increase in duty on beer, cider, wine or spirits.