In a highly anticipated Autumn Statement announcement, the Chancellor Jeremy Hunt has set out his first major fiscal plans since taking up his post in October.
The Chancellor said his plans are focussed on supporting stability, growth and public services.
The government claims the latest set of measures are supported by the Office for Budget Responsibility (OBR) and that they will help deliver a ‘shallower downturn, lower bills, bring higher growth and a stronger education system.’
In a bumper announcement, tackling inflation was said to be the priority, with the Chancellor stating the government ‘whole heartedly supports’ the bank of England in its plan to defeat inflation.
Here’s an overview of the headline measures announced…
Tax changes
To help raise funds, the Chancellor announced tax hikes of £25billion by 2027/28, including:
- The 45p tax rate threshold will be reduced from £150,000 to £125,140
- Income tax, inheritance tax and National Insurance thresholds will be frozen for a further two years until April 2028
- Dividend allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024
- Annual exempt amount in capital gains tax will be reduced from £12,300 to £6,000 next year and then to £3,000 from April 2024
Windfall tax
The Chancellor said he has ‘no objection’ to windfall taxes as long as they are temporary and do not deter investment.
- He announced that the 25% levy introduced on oil and gas profits this year is to be increased to 35% and extended until March 2028
- In addition, helping to raise £14bn next year, there will be a 40% tax on profits of older renewable or nuclear electricity generation
Business support
A £13.6bn package of support for business rates payers in England, over five years was announced. The Chancellor also confirmed that:
- A revaluation of rates would go ahead from April 2023
- To protect businesses from rising inflation the multiplier will be frozen in 2023/24
- Relief for 230,000 businesses in retail, hospitality and leisure sectors is also increased from 50% to 75% next year
- A new Transitional Relief Scheme to cap bill increases for some
Cost of Living
The Energy Price Guarantee, which is currently capping typical energy bills at £2,500, will change from April 2023 when the cap rises to £3,000.
Targeted support worth £26bn was announced with:
- Those in receipt of means-tested benefits to receive a cost-of-living payment of £900 in instalments
- £300 will be paid to pensioners
- £150 will be paid to people on disability benefits
- The £400 support to all households will not be repeated
- National Living Wage will be increased by 9.7% to £10.42 an hour
Stamp duty
The stamp duty measures announced by the previous chancellor will remain in place until 2025.
Spending
While many spending cuts were announced, the Chancellor claimed his latest measures support the PM’s vision for the UK which includes a strong NHS and a world class education system.
- The budget for schools will increase by £2.3bn this year and next, taking the schools budget to a total of £58.8bn
- NHS budget will increase by £3.3bn for the next two years
- Adult social care funding will increase by up to £2.8bn in 2023/24 and £4.7bn in 2024/25
Motoring
In a significant change, electric vehicles are set to be charged road tax from 2025.
Pensions and benefits
The Chancellor will raise pensions in line with the September inflation figure of 10.1% meaning:
- The state pension will rise by £18.70 to £203.85 a week
- The triple lock guarantee has been reinstated for 2023/24
- Benefits also to be raised in line with inflation, seeing those on Universal Credit receiving a further £600 per year
For advice on how any of the new measures could affect you and your business, contact us via email to info@beatons.co.uk or call 01473 659777.