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Autumn Statement 2023: The Key Points

The Autumn Statement 2023 was announced on the 23rd of November by the Chancellor of the Exchequer, Jeremy Hunt, bringing with it a range of changes that could impact small businesses and self-employed individuals across the UK. From National Insurance thresholds to full expensing capital allowances, many of the announced 110 growth measures will be relevant for businesses and sole traders. Whether you’re a business owner, employee or self-employed individual, it’s important to stay informed so that you can make the best decisions for your business moving forward.

Budget announcement

A Quick Overview of Autumn Statement 2023

There are relatively few large scale changes resulting from the autumn statement this year. Chancellor Jeremy Hunt and the Conservative party are attempting to delicately navigate reducing inflation while maintaining a steady level of economic growth, as a result there are fewer reforms and tax cuts than we usually would see in the final statement before an election year.

The key policies announced included:

  • Reductions in national insurance contributions
  • Full expensing capital allowances
  • Welfare reforms to increase employment
  • National Living Wage reforms

The reductions in type 1 NI contributions will see people taking home more money from their pay slips and the reductions in type 4 contributions will help the self employed. Small businesses will also benefit from the full expensing capital allowance being made permanent.

The Impact of the Autumn Statement on Small Businesses and the Self-Employed

The Chancellor announced a positive outlook on the economy at the beginning of his speech and the OBR forecasts presented indicate that we can expect to see economic growth over the next five years with inflation falling to the target of 2% by 2025 hopefully. This will help create an environment in which small businesses and the self employed can thrive and seize new opportunities next year as well as cheaper opportunities to borrow as the interest rates decrease.

While there are not too many radical changes, the autumn statement as a whole does seek to help businesses and the self employed. Cutting NICs will give sole traders greater take home pay and the confirmation of the IR35 offset coming into place on the 6th of April 2024 will greatly increase confidence in hiring contractors therefore boosting the opportunities to PSCs.

Personal tax rates, however, remain as before with the income tax thresholds still frozen in place. This is increasing HM Treasury’s income yearly, allowing the government to finance its extremely high debt to GDP ratio which was announced to be 94% by the end of the forecasting period. It is possible that there will be changes to the tax rates in the spring budget in order to gain favour before the next general election but for now the only changes that will be seen on your take home pay will be from the reduction in national insurance contributions.

National Insurance Thresholds

Perhaps the headline of the 2023 statement was the changes to National Insurance contributions (NICs) for both employees and sole traders. The rates of class 1 NICs paid by employees will be cut from 12% to 10% from the 6th January 2024 and the main rate of class 4 NICs will be reduced from 9% to 8% from the 6th April the same year.

This cut will save people on the average UK salary £450 per year which will help ease peoples money concerns. There is less of a cut for sole traders but more take home pay is always welcomed. If you are unsure what this may mean for you or your employees then please do get in touch with one of our expert accountants who will be able to guide you through the specific impacts that these decreases may have for you.

Full Expensing Capital Allowance

The announcement concerning full expensing capital allowance from the autumn statement provides an extension of the tax relief enjoyed by businesses investing in plant and machinery expenditure. This was initially brought in at the spring budget earlier this year to incentivise business investment and has now been extended to become a permanent feature in the long term, providing potential benefits for companies liable to corporation tax.

What It Is and Why It Matters

Full expensing allows businesses to offset investment into things such as new IT equipment and large machines against their taxable profit which reduces their overall tax bill. It can be hugely beneficial to those companies that need to make large purchases such as lorries and equipment.

If you are a small business owner who operates a capital heavy business this is likely a scheme that will be to your advantage going forwards and you should speak to a tax professional to gain further advice on the best way to take advantage of this opportunity.

Business Rates

The business rates policy announced in Wednesday’s autumn statement are another extension of an already existing set of legislation that sees businesses in the retail, hospitality and leisure sectors enjoy up to a 75% relief in business rates, up to £110,000 per business.

Further to this the small business multiplier is frozen at 49.9p for the next tax year in 2024/25 meaning that smaller firms do not need to anticipate a rise in small business rates. The standard rate however will be uprated in April by September’s CPI figure of 6.7% which will increase the multiplier by 3.6p to 54.6p. If you are paying the standard rate now then you should plan ahead for this rise in rates which was announced to take effect on the 1st April 2024.

Welfare Reforms

There were numerous welfare reforms in the autumn statement which aim to employ a further 200,000 people. These include mandatory work experience for individuals claiming benefits for over 18 months as well as an increase of 6.7% in the payments received by those claiming benefits.

Pensions were mentioned by Mr Hunt and from April 2024 there will be a 8.5% increase in the state pension in line with the average earnings growth from May to July. The chancellor reaffirmed the government’s commitment to the pension triple lock stating that it had been a lifeline for many during a period of high inflation, and in contrast to some debate before the autumn statement which was questioning if the government would stand by their commitment to it.

The Rise in National Living Wage

Changes to the national living wage (NLW) were also announced. The NLW was increased to £11.44 an hour and widened to include 21 and 22 year olds for the first time. This will be relevant for businesses that pay staff at the current lower bounds as well as those employing 21 and 22 year olds at minimum wage.

There were also increases in the rates for 18-20 year olds by 15% and younger apprentices by 20%. These changes are important to take note of if you have employees that are on these lower rates and will need to have their pay increased from April 2024 in order to stay compliant.

Other Announcements

Other announcements of note in the Autumn Statement are the freezing of alcohol duties until the first of August 2024 which will be a welcome announcement for pubs and restaurants who have been feeling the squeeze of the cost of living crisis.

There was also an announcement of new investment zones in Greater Manchester, West Midlands, East Midlands and Wrexham. They have been established with the aim of improving British business growth and infrastructure spending both in the public and private sector. By offering additional funding and tax breaks to businesses and individuals in these areas the chancellor hopes to create jobs and stimulate the economy to produce up to an extra percent of GDP growth per annum.

What Does the Autumn Statement Mean for Me?

While this Autumn Statement was not revolutionary there are still some benefits to peoples take home pay coming from the reduction in national insurance and the rises in NLW to reduce the number of low income workers.

Business owners have been presented with opportunities to benefit and there are more than those mentioned above. Speaking to one of our accountants may help you to take full advantage of the full expensing, rates relief and changes in NICs.

If you want to discuss the Autumn Statement then please get in touch with one of our team.