The Chancellor of the Exchequer, Jeremy Hunt, delivered his much-trailed forecast of the way forward for the UK economy. Mr Hunt explained that the government was focussed on five areas: reducing the national debt; cutting tax and rewarding hard work; backing British business; building domestic and sustainable energy and delivering world-class education.
We were spared the detail of the ‘110 measures’ during the course of his speech but readers can examine the Treasury documents which provide the minutiae behind the Statement. Many political and economic commentators predicted a reduction in National Insurance Contributions, changes to Inheritance Tax and business tax reductions. They got two out of three right.
For the contracting industry, and indeed the general working population the headline announcements were:
- Employee National Insurance rate cut from 12% to 10% on 6 January 2024. There is no change in Employer’s National Insurance rates;
- Class 2 National Insurance Contributions for the self-employed is abolished from April 2024 (currently £192 p/a) but voluntary contributions can still be made to secure benefits;
- Class 4 National Insurance Contribution for the self-employed is reduced from 9% to 8%, again from April 2024;
- IR35 (Off-Payroll Working): the government will legislate in the Autumn Finance Bill 2023 so that clients can offset liability under the rules by those amounts already paid by the contractor, including corporation tax.
- The National Living Wage will rise from £10.42 to £11.44;
- Tobacco duty has been put up by 10% but alcohol taxes have been frozen until August 2024.
Businesses investing in plant and machinery, IT, etc will be pleased to see that the ‘full expensing’ of certain capital equipment has been made a permanent feature whilst Business Rate Relief has been extended for many small retail and hospitality businesses. The Chancellor was expected by some observers to set out changes to state benefits in the Statement and he duly did so by confirming the state pension ‘triple lock’ would apply at 8.5% from April 2024.
He also announced that Universal Credit and Disability Benefit would rise in line with inflation at 6.7%. In an attempt to encourage more unemployed people into work, there will be a clampdown on welfare recipients who do not get a job for 18 months, leading to a possible stoppage of benefits.
As expected, there was no reference to reform of the Umbrella industry. However, other unveiled measures included:
- Additional funds for HMRC to streamline their debt management, focussing on Construction Industry fraud and supporting strong measures to counter tax avoidance;
- A commitment that HMRC would review and clarify their position on tax relief for training costs incurred by the self-employed;
- Reform and incentives to encourage local authority planning applications;
- Pension fund reforms which could lead to individuals having ‘one pension pot for life’ if they so choose;
- Changes to the Research & Development (R&D) scheme to encourage investment in key strategic industries such as life sciences, aerospace and the green energy sectors.
The Autumn Statement contained no real surprises, which is perhaps because the government is facing a general election next year. With inflation falling and tax revenues rising, could we see some rather large rabbits being pulled out of the Chancellor’s hat in the Spring Budget of 2024? I suppose time will tell.
