Autumn Statement 2023 – Key Points

The Chancellor Jeremy Hunt delivered the Autumn Statement 2023 at 12.30pm today. 

In his statement, the Chancellor stated that following a global crisis he has made difficult decisions to get the UK economy back on track.  He advised that this was an Autumn Statement for growth and to reward hard work.  A total of 110 growth measures are to be introduced to support people and businesses.

Download our detailed analysis of the Autumn Statement here:

Autumn Statement 2023

The key measures announced in the Autumn Statement are as set out below:

Personal tax

• The main 12% rate of employee national insurance contributions will reduce by two percentage points to 10%.
• This tax cut will be brought in from 6 January 2024.
• This will affect 28 million people, saving someone on the average salary £450 per annum.

Growth

• The chancellor says forecasts from the Office for Budget Responsibility show the economy will grow by 0.6% this year and 0.7% next.
• It is now 1.8% larger than it was before the Covid-19 pandemic, according to the official figures.
• Inflation is expected to fall to 2.8% by the end of 2024.
• GDP will then grow 1.4% in 2025, and 1.9% in 2026 and 2% in 2027 and 1.7% in 2028.
• In March, the OBR had forecast the economy would shrink by 0.2% in 2023, before growing by 1.8% in 2024, 2.5 % in 2025, 2.1% in 2026 and 1.9% in 2027.

Inflation

• Inflation has fallen from 11.1% to 4.6%.
• Inflation is expected to fall to 2.8% by the end of 2024.

Wages and benefits

• Universal Credit and other benefits to increase by 6.7% from April 2024 benefiting 5.5 million households up to £470 per year.
• In 2024, the Local Housing Allowance which supports low income families with their housing costs is to increase.
• People claiming benefits will face mandatory work experience if they do not find a job within 18 months.
• As pre-announced, the “national living wage” will increase by more than a pound an hour from April to £11.44. It will also be extended to 21-year-olds.
• There will be tougher requirements for those who claim benefits to look for work.
• From April 2024, the state pension will be increased by 8.5%.  Basic full State Pension will be £221.20 per week.
• The local housing allowance will be increased, which has been frozen since 2020, in a measure worth £800 for some households next year.
• Legal right will be introduced for new employers to pay into existing pension funds of employees.  In a bid to simplify people’s pensions so that most investors will have one pension fund for life.

Borrowing

• Debt is to be worth 94% of GDP by the end of the forecast period, lower than forecast by the OBR in March.
• In cash terms, the OBR estimates the budget deficit – the gap between spending and income – is 4.5% of GDP in 2023-24.
• In its previous forecasts in March, the OBR had estimated borrowing would be 5.1% of GDP or £132bn in cash terms, in 2023-24.
• Overall, the OBR says that the course for borrowing in the next five years is “little changed” from March, as any improvement has been wiped out by the chancellor’s new measures.

Business

• The capital ‘full expensing’ will become permanent. This allows businesses to offset investment in items such as new IT equipment and factory machinery against tax.
• Abolish Class 2 national insurance contributions for the self-employed. This will cut taxes for 2 million self-employed people.
• Class 4 contributions for the self-employed will be cut by one percentage point to 8%.
• There will be a business rates discount for hospitality retail and leisure worth £4.3bn.
• The business rates standard multiplier will rise in line with CPI inflation however for small business then the multiplier will be frozen for a further year.
• £500m fund over 2 years for super-computing to enable the UK to become an AI Powerhouse.
• Public sector payment terms to the subcontractor supply chain to be 55 days from April 2024 and to move to 30 days.

Economy

• The chancellor will invest an extra £4.5bn between 2025 and 2030 in manufacturing.
• About £1m will go to aerospace companies and businesses working on green technologies.
• He says there will be a new “investment zone” in Wrexham, Wales, in a bid to increase employment in the area. There will be three others in England: Greater Manchester, and the West and East Midlands.

Other

• £3 million of additional funding this year to the Community Security Trust, an organisation established to protect British Jews from antisemitism and related threats. This funding will be maintained next year, bringing annual protective security funding for the Jewish community for 2023-24 and 2024-25 to £18 million.

• The government is also investing up to a further £7 million over the next three years for organisations like the Holocaust Educational Trust to help tackle antisemitism. This funding will ensure support is in place for schools and universities to understand, recognise, and deal with antisemitism effectively.

• National Insurance relief for Employers of veterans extended for one year from April 2024.

Duties

• Duty rates on all tobacco products will increase by RPI +2%.
• To reduce the gap with cigarette duty, the rate on hand-rolling tobacco will increase by RPI + 12% this year. These changes will take effect from 6pm on 22 November 2023.
• The government will freeze alcohol duties until 1 August 2024 and delay its annual uprating decision to the Spring Budget 2024 to give businesses time to adapt to the duty system introduced on 1 August 2023.

If you have any questions on how the announcements impact on you or your business, please get in touch on 01228 904904.