This years Autumn statement hopefully won’t be a repeat of last years mini-budget delivered in September 2022. The past year has been a year of challenges for both individuals and businesses in the UK.
This Autumn Statement comes with a general election fast approaching, but is it too late for the Conservative government?
This budget was uneventful, but seeks to get the UK economy back on track. After the global pandemic, the impact of the war in Ukraine and the increased cost of living crisis, the UK economy has been through a turbulent time. After inflation dropped to 4.6% in October, the lowest it has been in several months, this budget seems geared towards getting the British economy moving again.
The National insurance cuts for both employed and self-employed will be welcome to many. For self-employed, the abolishment of Class 2 National insurance and the reduction of Class 4 National insurance from 9% to 8% for earnings between £12,570 and £50,270. For employed the reduction of employee’s National insurance from 12% to 10% again for earnings between £12,570 and £50,270 coming into effect from 6th January 2024. My worry is that although inflation on face value seems to be becoming down, the cost of everyday items, especially in the supermarkets seem to be continually rising. The cut in National insurance will give a little pay rise to individuals – but will it be enough?
For businesses, the government seems keen to support and encourage businesses to continue investing. With the additional tax relief set available due to end in 2026, the government has reversed this decision and this has now been made permanent. For every ‘£1million pound a company invests, it would get £250,000 off their tax bill in the same year’. Capital expenditure on certain assets will be treated as revenue expenditure, with full tax relief in the year of purchase – things like new plant, machinery, computers and vans. The government wants businesses to continually invest. This is nothing new, but confirms the governments plans to grow the economy.
For many businesses in the UK, one of the biggest resources is staff. The government has pledged £50m over the next two years to increase the number of apprenticeships in engineering and other key growth sectors. Having been through an apprenticeship type placement myself at Lambert Chapman, I feel that investment in staffing is key to the future of businesses as the next generation come through the ranks.
Making Tax Digital did not make the Chancellors announcement, considering the focus was on the self-employed. It has however been confirmed that MTD won’t be rolled out for those earning under £30,000 as HMRC want to improve the relevant systems in place. Although this will be welcome pause for many, it is a change that self employed tax payers are going to have to embrace in the future. With various options available – it is now easier than every to keep records digitally.
Overall, the Autumn Statement contained little changes other than National insurance. It will be interesting to see how the next few months unfold as we head into 2024 and the general election.
If you wish to discuss the Autumn statement or any other matters please do not hesitate to make contact with your usual Lambert Chapman contact or myself.
Mark Pearson – Partner