Budget
As we transition into the latter part of the year, it's time for a comprehensive look at the recently unveiled Autumn Statement for 2023. The Chancellor has outlined a bold vision for the future, emphasising a commitment to supporting businesses, empowering workers, and fostering economic growth through a series of impactful measures.
Economy:
The Office for Budget Responsibility (OBR) expects the economy to grow by 0.6% this year and then by 0.7% next year. GDP is then expected to grow 1.4% in 2025, 1.9% in 2026 and 2% in 2027 and 1.7% in 2028.
Inflation is expected to fall to 2.8% by the end of 2024, down 11.1% from last year. It’s also expected to fall to 2% by the end of 2025 which is the Bank of England’s target rate.
However, underlying debt is expected to increase to 91.6% of GDP next year; 92.7% in 2024-25; 93.2% in 2026-27 with the borrowing forecast to fall from 4.5% of GDP in 2023-24; to 3% in 2024-25; 2.7% in 2025-26; 2.3% in 2026-27; 1.6% in 2027-28 and 1.1% in 2028-29.
Business:
From 6th April 2024 tax for the self-employed is to be cut and simplified. The flat rate Class 2 NIC will be abolished and the rate of Class 4 NIC paid on earnings between £12,570 and £50,270 will be reduced from 9% to 8% resulting in an an average saving of around £350 for someone self-employed earning £28,200 a year.
The previously announced temporary full expensing for capital allowances due to end in 2026 is to be made permanent. A company can claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
The existing R&D Expenditure Credit (RDEC) and Small and Medium Enterprise Scheme will be merged in April 2024, simplifying the system. The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D-intensive loss-making SMEs will be lowered to 30% for accounting periods starting 1st April 2024.
In further support for small businesses, the government announced the small rate multiplier for business rates will be frozen for a further year and the Retail, Hospitality and Leisure 75% discount to business rates relief has been extended for a further year also.
The government is launching a call for evidence on a lifetime provider pension model which would allow individuals to have contributions paid into their existing pension scheme when they change employer.
A freeze on alcohol duty until August 2024 to give businesses time to adapt to the duty system introduced in August 2023.
Personal:
Employee National insurance rate paid on earnings between £12,571 and £50,270 will be cut from 12% to 10% from 6th January 2024.
An increase in NMW for those aged 21 and over to £11.44 will come into effect from April 2024. The government will also increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17-year-olds and apprentices by 21.2% to £6.40 an hour.
The State pension is to increase by 8.5% to £221.20 a week in April 2024, as the government honours its commitment to the triple lock.
Universal Credit and other working-age benefits will increase in April 2024 by 6.7% in line with September's inflation figure rather than the lower October rate.
Conclusion:
The Autumn Statement 2023 unveils a comprehensive blueprint for Britain's economic resurgence, embodying a commitment to growth, resilience, and social equity. The Chancellor's bold vision, backed by 110 strategic measures, not only addresses immediate challenges but also lays the groundwork for a flourishing future.
As we navigate the economic landscape, the projected GDP growth, coupled with measures to curb inflation, instils confidence in the nation's financial stability. Despite the anticipated rise in underlying debt, the government's meticulous borrowing reduction plan underscores a proactive approach to fiscal responsibility.
