Today the Chancellor of the Exchequer, Jeremy Hunt, presented his Autumn statement.
Below we break down the keep points and how they will affect you and your business.
National Insurance and wages
The main rate of Employee National Insurance (NI) has been cut from 12% to 10% from 6 January and is applied to earnings between£12,571 and £50,271. Usually this would wait until the new tax year but instead it is being brought in sooner so people see a faster impact. It will mean that those on an average salary of £35,000 will save an extra £700 in NI deductions per year.
Class 2 NI – paid by self-employed people earning more than £12,570 – will be abolished from April so the last year it will be applied is the 2023/24 personal tax year saving those individuals £192 per year.
Class 4 NI for self employed – paid on profits between £12,570 and £50,270 – will be cut from 9% to 8% from April.
Unusually, the new rate will apply to 21 and 22-year-old workers for the first time, rather than just those 23 and over. It will be important to ensure that employees are on the legal minimum for their age bracket going forward.
Those aged between 18 to 20 should be paid a minimum of £8.60 an hour from April. Those aged 16 to 17 and those on an apprenticeship should receive a minimum of £6.40.
Economy and growth
The independent Office for Budget Responsibility (OBR) expects the economy to grow by 0.6% this year and 0.7% next year, rising to 1.4% in 2025; then 1.9% in 2026; 2% in 2027 and 1.7% in 2028
It forecasts that headline inflation – the rate prices are rising – will fall to 2.8% by the end of 2024 and to the Bank of England’s 2% target rate in 2025.
Business tax and rates
Known as the “Full expensing” tax break, which allows companies to deduct spending on new machinery and equipment from profits was to end in 2026 but will now be made permanent, providing the relevant criteria is met. It is hoped this will encourage companies to continue investing in new assets for their businesses.
The 75% business rates discount for retail, hospitality and leisure firms in England has been extended for another year up to £110,000 per year.
Financial incentives for investment zones and tax reliefs for freeports extended from five years to 10 years, with new investment zones announced for the West Midlands, East Midlands and Greater Manchester, as well as Wrexham and Flintshire
A further £80m for new Levelling Up Partnerships to fund regeneration projects in Scotland
Fuel duty was not mentioned so remains unchanged at 52.95p per litre of petrol and diesel.
As the rate of inflation is expected say above the 2% target, businesses have been warned not to expect a fall in the rate of interest any time soon.