Autumn Summary 2023

The Autumn Statement is one of the most important events in the UK’s economic and fiscal calendar, as it reveals the government’s plans for spending, taxation, and borrowing for the next five years. This year, the Autumn Statement was delivered by Chancellor Jeremy Hunt on 22 November 2023, and it included a number of measures aimed at boosting growth, supporting businesses, and easing the cost of living pressures. In this blog post, we will summarise some of the key announcements and their implications for you and your business.

Taxation and wages

One of the most significant announcements in the Autumn Statement was the cut in the main rate of National Insurance from 12% to 10% from 6 January 2024, affecting 27 million people. This means that someone earning £30,000 a year will save £360 a year in National Insurance contributions. The Chancellor said this was the biggest tax cut for working people in a generation, and it would help to offset the impact of rising inflation and interest rates.

The Chancellor also announced the abolition of Class 2 National Insurance, which is paid by self-employed people earning more than £12,570 a year, from April 2024. This will save around 3.5 million self-employed people £160 a year. In addition, the Class 4 National Insurance rate for self-employed people, which is paid on profits between £12,570 and £50,270, will be cut from 9% to 8% from April 2024. This will save around 2.5 million self-employed people £200 a year.

Another major announcement was the increase in the legal minimum wage, also known as the National Living Wage, from £10.42 to £11.44 an hour from April 2024. This is a 9.8% increase, which is the largest ever in cash terms. The new rate will also apply to 21 and 22-year-old workers for the first time, rather than just those 23 and over. The Chancellor said this would benefit around 2.5 million workers, and make the UK’s minimum wage one of the highest in the world.

Benefits and pensions

The Chancellor also announced a significant increase in universal credit and other working-age benefits in England and Wales by 6.7% from April 2024, in line with September’s inflation rate. This will restore the value of these benefits, which have been frozen or capped for several years. The Chancellor said this would help to protect the living standards of the most vulnerable in society.

Another measure to help with the cost of living was the unfreezing and increasing of the Local Housing Allowance rates, which determine the level of housing benefit and universal credit people receive to pay rent in Great Britain. The rates will be increased to 30% of local rents from April 2024, which will benefit around 1.5 million households. The Chancellor said this would help to prevent homelessness and support people to move into work.

The Chancellor also announced some reforms to the Work Capability Assessment, which is used to determine whether people claiming benefits are able to work or not. The assessment will be updated to reflect the availability of home working after the Covid pandemic, and to take into account the impact of mental health conditions on work capability. The Chancellor said this would make the assessment fairer and more accurate.

The state pension payments will also increase by 8.5% from April 2024, in line with average earnings. This is the result of the triple lock mechanism, which guarantees that the state pension rises by the highest of inflation, earnings, or 2.5%. The Chancellor said this would provide security and dignity for pensioners, and maintain the value of the state pension in real terms.

The Chancellor also launched a consultation on whether savers should have the right to choose the pension scheme their employer pays into, possibly allowing them to have one pension pot for life. The Chancellor said this would give savers more control and flexibility over their retirement savings, and reduce the complexity and costs of managing multiple pension pots.

Economy and public finances

The Chancellor’s package included 110 measures aimed at boosting economic growth, such as business tax cuts, infrastructure spending, innovation funding, and skills development. The Chancellor said these measures would help to create a more dynamic, productive, and competitive economy, and support the UK’s transition to a net zero carbon emissions target by 2050.

The Chancellor also presented the latest forecasts from the independent Office for Budget Responsibility (OBR), which showed that the UK economy was recovering from the impact of the Covid pandemic faster than expected. The OBR expects the economy to grow by 0.6% this year and 0.7% next year, reaching its pre-pandemic level by the end of 2024. It also expects inflation to fall to 2.8% by the end of 2024, before reaching the Bank of England’s 2% target rate in 2025. The OBR also expects unemployment to peak at 5.2% next year, lower than previously predicted.

The Chancellor also reported on the state of the public finances, which have been severely affected by the unprecedented levels of borrowing and spending during the Covid crisis. The Chancellor said that the government was committed to fiscal responsibility and sustainability, and that the public finances were improving as the economy recovered. The Chancellor said that the underlying debt was forecast to be 91.6% of GDP next year, and that it would start to fall from 2026-27 onwards. The Chancellor also said that the borrowing was forecast to fall from 4.5% of GDP in 2023-24 to 1.1% of GDP in 2028-29.

Conclusion

The Autumn Statement 2023 was a significant and ambitious announcement by the Chancellor, which aimed to address the challenges and opportunities facing the UK economy and society in the aftermath of the Covid pandemic. The Chancellor said that his package would deliver a stronger, fairer, and greener future for the UK, and that it would balance the need to support the recovery, invest in growth, and maintain fiscal discipline. The Chancellor said that his package would make the UK the best place in the world to start, grow, and run a business, and the best place in the world to live, work, and retire.

If you would like to know more about how the Autumn Statement 2023 affects you and your business, please contact us today. We are a professional and friendly accountancy practice that offers a range of services to help you with your business and personal finances. We are Xero Advisor Certified and QuickBooks Certified Pro Advisors, and we use the latest technology and tools to provide you with efficient and effective solutions. We work with various types of businesses and organisations, such as sole traders, partnerships, limited companies, and charities, and we tailor our services to your specific needs and goals. Contact us today to find out how we can help you achieve your financial success.