On Wednesday 22nd November 2023, Chancellor Jeremy Hunt revealed the UK government’s tax and public spending plans in his Autumn Statement. Our tax experts outline the key changes announced and how they could impact your finances in this Autumn Statement 2023 summary.
The Autumn Statement 2023 was shared in the House of Commons on Wednesday 22nd November, with the government announcing several key changes to tax policies and public spending plans. Delivered by Chancellor of the Exchequer Jeremy Hunt, the latest budget update consisted of 110 measures to ‘help grow the economy’.
Headline changes included a 2% cut to employees’ National Insurance contributions (from 12% to 10%) and a 9.8% increase in the National Living Wage (National Minimum Wage). Many business owners will also welcome the news that full expensing, which allows companies to offset investment costs related to IT, machinery and equipment against corporation tax, has been made ‘permanent’. Additionally, four new investment zones will soon be introduced to the UK as the government aims to incentivise business growth.
In this Autumn Statement 2023 summary, we have detailed the key announcements made by the Chancellor.
What changes were announced in the Autumn Statement 2023?
- National Insurance contributions have been cut by 2%, decreasing from 12% to 10%. The new rate will come into force on 6th January 2024.
- The self-employed will also benefit from changes to National Insurance, with class 2 NI contributions being abolished altogether and class 4 NI contributions reduced from 9% to 8%.
- The tax reliefs and financial incentives available to businesses within UK freeports and investment zones have been extended from 5 years to 10 years.
- The full expensing capital allowances scheme will be made ‘permanent’. This tax relief enables businesses to offset certain costs, including IT, machinery and equipment, against their corporation tax liabilities.
- A new simplified R&D tax relief will be introduced from April 2024, combining the existing R&D Expenditure Credit and SME schemes.
- Tobacco duty has increased by 10%, while alcohol taxes have been frozen until 1st
- The business rates relief scheme, which sees retail, hospitality and leisure businesses benefit from 75% discount on business rates up to £110,000, has been extended for another year.
- The National Living Wage (also the National Minimum Wage) will increase to £11.44 per hour from April 2024, a 9.8% increase. The NLW will also be extended to workers aged 21 years old and above.
- State pensions will be increased by 8.5%.
- A consultation on pension funds will aim to give workers the right to require new employers to pay pension money into their existing pension pot, making it easier for people to have one pension pot for life.
- Benefits and Universal Credit will increase by 6.7%, in line with the September inflation fate, however stricter rules will be enforced on job seekers. Benefits recipients will be required to participate in mandatory work experience if they are unable to find a job within 18 months.
- Four new investment zones will be introduced to the UK, with locations established in West Midlands, East Midlands, Great Manchester and Wrexham.
- There will be a consultation for a law on allowing any house to be separated into two flats, provided the exterior remains untouched.
- £4.5 billion will be invested in ‘strategic manufacturing’ between 2025 and 2030. This consists of £975 million for aerospace companies, £520 million for life sciences firms and £960 million for new firms within the green industry.
- Approximately £1 million will be invested in aerospace businesses and those developing green technologies.
- £500 million will be invested in making the UK an ‘AI powerhouse’ by funding new innovation centres across the country, following the success of supercomputing centres in Edinburgh and Bristol.
- The government will commit another £150 million to invest zones via the Invest Opportunity Fund programme.
- £50 million of funding over the next two years will aim to increase apprentice numbers in engineering and other key growth sectors for the government.
If you would like more information on any of the changes referenced in this Autumn Statement 2023 summary and how they could impact you or your business, contact PKF Smith Cooper today to access tailored advice from one of our specialist tax team.Download Publication