3 months ago
On 22nd November 2023, Chancellor Jeremy Hunt delivered the Autumn Statement. While there was the usual parliamentary pantomime, complete with mudslinging between both political parties, Hunt announced several reforms that could affect businesses of all sizes. In this article, we share everything UK businesses need to know about the Autumn Statement.
Amongst claims of backing British business, one of the key focuses of the Autumn Statement is to remove the red tape and speed up entrepreneurial endeavours.
UK inflation was 11.1%, but it recently fell and has held steady at 4.6%. The British Government plans to keep reducing inflation and targeting a decrease to 2.8% in 2024 before finally reaching its target of 2% by 2025.
While this will help to improve the cost of living, the Government will invest £104bn into further measures to reduce the cost of living in 2024, including the following:
Increase universal credit by 6.7%.
Increase the local housing rate.
Freeze alcohol duties until 1st August 2024.
Increase the state pension by 8.5% by April 2024.
£104bn dedicated to tackling the cost of living crisis.
One of the Autumn Statement's main focuses was growing the British Economy, notably around growing British business through an investment of £20bn. Hunt noted that this investment won't be for loans but to back reforms for growth.
The Autumn Statement's focus on cutting red tape extended to planning. The British Government aims to reform the planning system to allow local authorities to recoup all planning costs if they can meet deadlines sooner, returning those costs due to missed deadlines. This approach aims to tackle the £32m tied up in planning, with Hunt claiming the reform will "bust planning backlog".
The planning reform also includes an investment of £110m into new homes, reducing delays in accessing the grid.
To enable growth in the British economy, Hunt's Autumn Statement included support for Britain's most innovative industries, including:
£500m investment into AI development.
Implementing a new R&D tax relief.
Reducing how much R&D companies are taxed.
Hunt also mentioned that the British Government would publish plans to make support available to various industries pushing British technological innovation forward, including:
Zero emission innovations.
Greener energy solutions.
Manufacturing was also mentioned, with a £4.5bn investment in the British manufacturing sector.
Business rates can be make or break for many UK businesses, so it may be reassuring to know that Hunt's Autumn Statement promised the following:
The standard rate multiplier will rise with inflation.
The small businesses rate multiplier will freeze.
An extension of a year for the 75% discount rate for retail, hospitality and leisure businesses.
Jeremy Hunt focussed on the scourge of late payments hurting small businesses. He said businesses bidding for government contracts must prove they pay invoices within 55 days.
If long payment terms are causing cashflow issues for your company, consider an invoice finance solution that allows you to unlock the cash tied up in your unpaid invoices.
The Autumn Statement focused on the importance of hard work and helping small businesses. For businesses in the retail, hospitality and leisure sectors, the benefits are clear. Those in hospitality selling alcoholic beverages will also benefit from the freeze on alcohol tax.
If the Government steps to reduce the cost of living come to fruition, consumer spending should increase. If the British Government continue to help small businesses, the Autumn Statement can be seen as a positive, allowing small businesses to flourish.
Hunt commented positively about hard-working, self-employed individuals who have kept many vital services running during the pandemic and beyond. If you're one of these people, you may be pleased by the following announcements during the Autumn Statement:
Class 2 National Insurance will be abolished.
Class 4 National Insurance will be reduced to 8% (a 1% reduction) from April 2024.
Access to entitlement and credits will remain.
Alongside reducing the cost of living, abolishing class 2 National Insurance and reducing class 4 National Insurance should help many self-employed individuals throughout the UK. Although there is undoubtedly more that could help, this is still a step in the right direction.
The Autumn Statement aims to provide reforms intended to incentivise work, which, along with changes to unemployment mentioned earlier in this article, the following benefits will soon become available:
30 hours of free childcare will roll out in April 2024.
The National Living Wage will rise to £11.44 an hour.
The main 12% rate of employee NI will decrease to 10% (2% reduction) from 6th January 2024.
Although the changes are minor, they're a welcome move that will benefit employees.
Employers paying the previous National Living Wage may feel the pinch if they go up in line with the increase. Still, there's historical proof of the positive impact on the economy of people receiving fairer pay. While it might be an initial hardship, the long-term benefit is there.
The Autumn Statement also covered pensions and unemployment, with claims made about increasing the pension pot of those who pay into one and the ability to move to one pension pot for life if you want to.
Unemployment policies seem to be going through some of the most significant changes for a long time, with the following changes forming part of the Autumn Statement:
Universal Credit will increase by 6.7%
The British Government aims to support further those who can't work due to illness or disability.
Conversely, they will offer mandatory work placements to those unable to find work, revoking benefits if they fail to uphold their commitment to these placements.
Rollout plans to increase the availability of apprenticeships.
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