The UK Autumn Statement 2023 includes several key measures that will impact small businesses and individuals, however contrary to widespread predictions, there were no reforms to capital gains tax, pension reliefs or any significant tax cuts for businesses. This came as a surprise to many, highlighting the unpredictable nature of economic planning.
Here’s an updated summary of the most pertinent points:
1. Economic Stability and Growth:
- The UK has reduced from 11% to 4.6% in October and is amongst the lowest inflation rates compared to other large economies and is expected to see a further reduction next year.
- The government is committed to reducing debt. Public sector borrowing will be kept below 3% of GDP, and the UK is projected to have the second-lowest debt as a percentage of GDP in the G7.
2. Support for Families and Individuals:
- To ease the cost of living, benefits will increase by 6.7%, and local housing allowance rates will also rise.
- All alcohol duty is frozen until August next year, providing some relief for consumers and businesses in the hospitality sector.
- The Triple Lock Pension remains in place, with state pensions increasing by 8.5% from April 2024.
3. Tax Cuts and Incentives to Work:
- Significant tax cuts for individuals, with employee National Insurance contributions decreasing from 12% to 10% starting January 2024.
- The self-employed will benefit from the abolition of Class 2 NICs and a reduction in Class 4 NICs from 9% to 8%.
- The National Living Wage will increase to £11.44 per hour, boosting incomes for many workers.
4. Business Growth and Investment:
- Over £20 billion is being invested to increase business investment.
- Small businesses will benefit from measures like faster payment terms and the requirement for public contract holders to demonstrate prompt invoice payments.
- Full capital allowances on all fixed assets in the year of spend, promoting further investment
5. Infrastructure and Innovation:
- Planning system reforms are set to boost efficiency and encourage development.
- Significant investments in AI, advanced manufacturing, and green industries, including £500 million for innovation centres.
- The introduction of new permitted development rights to convert houses into flats, facilitating housing and real estate ventures.
6. Levelling Up and Support for Specific Sectors:
- Continued support for 12 new innovation zones, with an extension from 5 to 10 years.
- Additional funding for apprenticeships in key sectors like engineering.
7. Pension Funds and Foreign Direct Investment:
- New measures to allow workers greater choice in pension fund investments.
- Initiatives to attract and retain foreign direct investment, crucial for economic growth.
8. HMRC and Tax Collection:
- HMRC will receive additional support to enhance tax collection, aiming to raise an extra £5 billion, affecting compliance and enforcement aspects for businesses and individuals.
These measures present a mix of opportunities and challenges for businesses and individuals, it’s vital to understand how these developments can impact your operations and planning. Our team is here to guide you through these changes and help you leverage them for growth and stability. Contact us for tailored advice and support.
This blog post is based on the UK Autumn Statement 2023 and additional insights. For more detailed advice, always consult with a professional.