The UK Chancellor has delivered an Autumn Statement that cuts the average worker’s tax by £450 per year and encourages businesses to invest in machinery and equipment.
The Chancellor started by taking credit for halving inflation, a questionable claim given the dynamics of inflationary cycles and the actions the government have actually taken.
The OBR said the measures announced today would reduce inflation but the Bank of England’s target 2% inflation won’t be met until 2025.
UK growth for next year and the year after has been downgraded substantially by the OBR. UK growth is expected to be 0.6% this year, 0.7% in 2024 and 1.4% in 2025.
Debt as a proportion of GDP will fall to 92.8% by 2029 after rising in the coming years.
Jeremy Hunt said his plans were designed for the long-term, which was met with laughter from the opposite bench. The conservatives are miles behind the polls and will do well to be in power after next Christmas.
The Chancellor also announced they were exploring a public share sales of Natwest shares and were allocating £7m to fight antisemitism. Speaking about the rise of antisemitism in the UK, he said “when it comes to antisemitism, and all forms of racism, we must never allow the clock to be turned back.”
Housing
Reform the planning process to speed up planning applications by reimbursing local government for the costs of processing applications for larger business projects.
£450m allocated to local housing projects.
Permission for any house to be converted into two flats as long the exterior remains unchanged.
Stamp Duty on Shares
Stamp Duty relief on shares will be extended to growth markets, and the market capitalisation threshold is to be increased from £170 million to £450 million.
Matt Tickle, Chief Investment Office at independent consultancy Barnett Waddingham said:
“Hidden in the little red book is some good news which deserved to make the cut for the speech. The Chancellor is going to extend the relief from Stamp Duty on shares. It will now include smaller, innovative growth markets, as well as increase the threshold for the market capitalisation condition that is used within the exemption from £170 million to £450 million. These changes are set to be implemented from 1st January 2024.”
VCT and EIS
Government to extend the existing sunset clauses for EIS and VCT to April 2035 supporting investment into exciting early stage companies for many years to come.
Business Investment
£500m to be allocated to a fund to propel the UK’s AI sector through innovation centres and make the UK an ‘AI Powerhouse’.
£45bn to be allocated to the manufacturing sector in the years up to 2030. Money will be allocated to sectors like aerospace and life sciences.
Tax
National Insurance cut from 12% to 10%. This will reduce tax for 27 million across the UK. Someone earning £32,000 will save £450 a year.
The headline business tax cut was the making permanent of the 25% corporation tax offset businesses can claim back for investments made in plant and equipment.
75% business rates holiday for retailers and hospitality extended for an extra year.
Abolishment of Class 2 National Insurance for self-employed people, worth about £192 a year for the average self-employed person.
Benefits
National living wage increased to £11.44. This, combined with tax measures announced today, means people’s take-home pay will go up 30%.
Job seekers who haven’t found a job after 18 months will have to attend a compulsory course. Those who don’t attend will have their benefit revoked.
£10m will be made available to Veterans through mental health services.
To help the long-term sick and those with disabilities, new measures have been introduced to support working from home.
Universal Credit and other benefits are to be increased by 6.7% next year.
Pensions
The government committed to the pensions triple lock and increased pensions by 8.5% from April 2024.
The Pensions Triple Lock and Pension Credit will be protected and rise in April 2024 by 8.5%.
— HM Treasury (@hmtreasury) November 22, 2023
This will support pensioners across the United Kingdom with the cost of living. pic.twitter.com/X17aiUFjFP
“Despite some predictions that the government would look to change the way in which the State Pension Triple Lock works, by removing the effect of bonuses on the figure produced for pay increases, the Chancellor instead announced today that they would honour the Triple Lock in full,” said William Stevens, Head of Financial Planning at Killik & Co.
“This will be welcome news to pensioners, many of whom rely on the State Pension to provide the basis for their expenditure in retirement. The 8.5% increase will take the full state pension to as much as £11,502 on an annual basis. A retired couple living on the State Pension alone could therefore have as much as £23,000 per year of guaranteed income to support them in retirement.”
Employees will have the right to ask employers to pay contributions into their existing pension pots.
Alcohol Duty
Alcohol Duty will be frozen until August 2024, taking 3p off the duty for the average pint.
We're freezing alcohol duty to August 2024.
— HM Treasury (@hmtreasury) November 22, 2023
This takes 3p off the duty cost of an average pint of beer – saving pubs & our alcohol sector thousands in funds that they’ll be able to reinvest into their businesses. pic.twitter.com/3rSYO7pQX5