The 2023 Autumn Budget Statement and What it Means for You

It doesn’t seem like 5 minutes since the Spring Budget was delivered 8 months ago in March, but today the Chancellor of the Exchequer, Jeremy Hunt, delivered his Autumn Budget Statement to the House of Commons outlining his economic plan for the UK.

With cost of living pressures continuing to bite, the expectation was that focus would be on making difficult decisions to help families that are struggling financially, as well as boosting economic growth and continuing the reduction in inflation over time.

Rumours circulated prior to the statement that there would also be potentially significant tax cuts including changes to tax rates for the self-employed and employees.

All of that and more came to pass with many positive changes announced to stimulate the UK economy and reduce the tax burden on businesses and individuals. The outlook is generally positive with 0.6% economic growth forecasted this year and 0.7% next year, with growth expected to accelerate to around 1.8% in 2028.

Read on for the key points from today’s statement.

National Insurance Relief for the Self-Employed

Class 2 National Insurance Contributions will be abolished completely for 2 million self-employed people with profits of more than £12,570 per year which will save the average self-employed person £192 per year. Importantly, access to benefit entitlements and credits including the state pension are unaffected, but voluntary contributions can be made.

For those with taxable profits below £6,725, voluntary contributions will still be required in order to gain access to state benefits (and for a qualifying year for state pension), the rate of which will be maintained at £3.45 per week.

In a further significant measure, Class 4 National Insurance Contributions which are currently levied at 9% on all profits between £12,570 and £50,270 will be cut by 1 percentage point to 8%. This will save self-employed people an average of £350 per year.

Employee National Insurance Cut

In a significant change that will benefit 27 million workers, the main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10% for those earning between £12,570 and £50,270. This will save employees earning £35,000 an average of £450 per year.

The Government will introduce urgent legislation to expedite this change, with the aim to make it effective from January 6th next year rather than waiting for the new tax year in April.

Full Expensing will be Made Permanent

In what has been billed as the biggest business tax cut in modern British history, full expensing will be made permanent due to the reductions in inflation and borrowing. Initially this scheme was due to be active for a period of 3 years.

Full expensing is a tax break that allows businesses to take the cost of qualifying machinery or plant that they buy out of their pre-tax profits which saves them having to pay tax on this equipment.

The aim here is to increase the incentive for businesses to invest, with the Government forecasting investment will increase by around £3 billion per year as they aim to back businesses and economic growth.

National Living Wage Increased

The National Living Wage will be increased by 9.8% to £11.44 per hour from April 2024 as the Government aims to eliminate low pay. This change is expected to increase earnings for around 2 million workers.

The national living wage is currently £10.42 per hour so it will increase by £1.02 per hour, and this will apply to all workers ages 21 and over, where currently the National Living Wage only applies to workers aged 23 or over.

Those aged 18 to 20 will get at least £8.60 an hour from April and for those aged 16 and 17, and apprentices, the minimum pay will be £6.40 per hour.

Other Key Points Announced Include:

  • Universal Credit and other state benefits will increase by 6.7% from next April
  • Alcohol duty is frozen until 1st August 2024 but tobacco duty will increase by 10%
  • The pension triple lock will be maintained meaning the full State Pension will increase by 8.5% from April 2024
  • £450m will be allocated to the local authority housing fund to help deliver around 2,400 new homes
  • In good news for landlords, the local housing allowance will increase giving around 1.6 million households an average of £800 support to help with increased rental costs
  • £50m will be invested over the next 2 years to increase the number of apprentices in the engineering sector as well as other key growth sectors
  • A £500m fund will be created to support development in Artificial Intelligence
  • The small business multiplier will be frozen for another year and the 75% business rates discount for retail, hospitality and leisure will be extended for another year

How Gorilla Accounting Can Help You

As the UK’s most trusted accountants, we can help you make sense of the Autumn Budget and how it could impact your business. Our accountants are on-hand to answer any queries you have regarding the Budget, your business accounting, tax optmisation, compliance and much more.

If you need an accountant that you can trust with your finances, Gorilla Accounting are specialists in your field. For expert advice, speak to an accountant on 0330 024 0406 or request a call back.