Chancellor Jeremy Hunt presented the 2023 Autumn Statement to Parliament on November 22, along with supporting documents. Following the statement, the Office for Budget Responsibility (OBR) released updated forecasts for the UK's economic and fiscal outlook. Hunt emphasised delivering a growth-focused Autumn Statement, aligning with the Prime Minister's priorities to halve inflation, boost economic growth, and reduce debt. The Chancellor outlined growth measures supporting British businesses and initiatives to enhance work remuneration.
In his speech, the Chancellor said he was delivering an “Autumn Statement for growth”. He said the OBR’s forecast shows that the Prime Minister’s priorities for the economy are being met. The economic priorities are to halve inflation, grow the economy and reduce debt.
The Chancellor said the Autumn Statement set out “growth measures to back British business” and “measures to make work pay”.
The following policies were announced:
The government plans to reduce National Insurance Contributions (NICs) for employees and self-employed individuals. The changes include lowering 1 NIC from 12% to 10%, reducing 4 NIC from 9% to 8%. Additionally, self-employed individuals will only be required to pay 4 NIC, with the elimination of the obligation for both 1 and 4 NIC. Further reforms for Class 2 are anticipated next year.
The “full expensing” rule that allows businesses to fully deduct the cost of specific investments from their taxes is now set to be permanent, replacing a temporary provision scheduled to conclude in March 2026. This shift will result in a reduction of £9.2 billion in corporation tax revenue for the government.
The temporary reduction in bills for retail, hospitality, and leisure businesses, amounting to up to 75%, will be extended for one more year, incurring a one-off cost of £2.7 billion.
Several measures pertaining to tax reliefs have been introduced, encompassing enhanced support for small and medium-sized enterprises (SMEs) involved in Research and Development (R&D), an extension of the 'sunset date' for freeport tax reliefs, and administrative adjustments to tax reliefs within the creative industry.
The investment zones program will be extended from five to ten years.
VAT on period pants has been eliminated.
A 75% increase in the long-term sickness bill is registered.
There will be a freeze on alcohol duty until August 2024, while the duty on rolling tobacco will see an increase of 18.1 per cent.
The employment plans involve allocating additional funds, approximately £0.4 billion annually from 2024 to 2027, to expand employment programs.
The local housing allowance rates will see an increase to match the 30th percentile of an area's market rents in 2024/25. Subsequently, these rates will be maintained in cash terms in the following years.
Commencing from April 1, 2024, the National Living Wage for eligible workers in the UK aged 21 and over will experience a 9.8% increase, reaching £11.44 per hour.
The freezing of personal income tax bands until 2027-28 will result in eventual additional taxes being paid.
The Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) system is set for enhancements and simplifications, eliminating the End of Period Statement requirement and providing flexibility for multiple tax agents.
The Finance Bill will now allow organisations to reduce extra PAYE taxes under off-payroll working rules, considering previous Income and Corporation Tax payments.
After these announcements, The OBR predicts a slower economic growth than forecasted in March 2023. The forecast indicates more persistent and domestically driven inflation, benefiting public finances.