Autumn Statement –- 7 key developments and their impact on businesses

Autumn Statement 2023 and seven key developments and their Impact on businesses.

​1. National Insurance Adjustments: A Relief for Employees and the Self-Employed The government has announced a reduction in National Insurance contributions for employees by 2%, affecting approximately 27 million people, effective from January 6, 2024. Additionally, the abolition of class 2 National Insurance will benefit self-employed individuals, saving them around £192 annually. Moreover, class 4 National Insurance will be reduced from 9% to 8% for earnings between £12,570 and £50,270. 

2. Corporate Taxation: Maintaining the Status Quo, The increase in Corporation Tax, from 19% to 25% for profits exceeding £250,000, will continue. To stimulate business investments in technology, equipment, and plant & machinery, full capital allowances will be fully deductible.  

3. Inflation Trends: A Positive Shift In a significant economic turnaround, the UK saw a drop in inflation to 4.6% this October, a notable decrease from the staggering 11.1% at the beginning of the year. While this reduction signals a positive shift, the government's forecast indicates a gradual path to the target inflation rate of 2%, anticipated to be achieved by 2025.  

4. Economic Growth and Recession Concerns the Office for Budget Responsibility (OBR) had earlier projected a recession in the UK. Contrasting this, the Chancellor recently expressed a more optimistic outlook, expecting the UK economy to grow by 0.6% this year. Furthermore, government debt has seen a reduction from initial forecasts, alongside a decrease in borrowing costs. From 2024, the UK economy is expected to witness a growth phase, offering a ray of hope for businesses and investors.  

5. Employment Incentives The employment allowance will continue at the elevated level of £5,000, providing further support to businesses.  

6. Capital Gains Tax: A Notable Change Beginning April 2024, the 'annual exemption' amount in Capital Gains Tax will be halved from £6,000 to £3,000, a change that businesses and investors need to prepare for.  

7. Additional Economic Measures

1. The government has committed an additional £50 million to boost apprenticeships across the UK.
2. Alcohol duty will remain unchanged.
3. The State Pension will see an 8.5% increase from April 2024, adhering to the triple lock policy, a crucial support for many vulnerable pensioners.
4. The Minimum Wage is set to increase to £11.44 per hour from April 2024, applicable to all workers aged 21 and above.

These developments reflect a blend of challenges and opportunities for UK businesses. While some measures, like the reduction in National Insurance and the retention of the employment allowance, offer immediate relief, others like the changes in Capital Gains Tax and Corporation Tax require strategic planning. The overall economic forecast, however, paints a cautiously optimistic picture for the coming years.