The Autumn Statement 2023: our initial reaction

Steven Wren and Kieron Clement-Smith share their quickfire summary of today’s quieter than anticipated Autumn Statement. The Chancellor of the Exchequer, Jeremy Hunt, announced a number of tax reductions with the “largest ever cut” to national insurance taking the headlines.

The details included:

  • Employees earning more than £12,570 a year currently pay 12% national insurance on earnings up to £50,270. That will decrease to 10%, from 6 January 2024, giving a saving of up to £754 a year.
  • For self-employed taxpayers, Class 2 national insurance will be scrapped (but they will continue to receive access to contributory benefits, including the State Pension) and Class 4 national insurance will be cut from 9% to 8% on earnings between £12,570 and £50,270, from 6 April 2024.  A saving of up to £377 a year.
  • It is interesting to note that the national insurance bandings for 2024/25 will be frozen making ‘fiscal drag’ a factor.

Other points to note:

In an announcement widely anticipated, the Chancellor has made permanent the ‘full expensing’ relief for companies from the 2026-27 tax year, when it was otherwise due to cease. In summary, this measure came in for expenditure on or after 1 April 2023 and will allow companies to claim 100% in-year relief for qualifying main rate capital expenditure on plant and machinery and 50% in-year relief for qualifying special rate capital expenditure.  These reliefs exclude expenditure on plant and machinery for leasing, second-hand assets and cars.

Following the government’s consultation on reforms to Creative Industry Tax Reliefs (CITR), the final amendments to the draft legislation for the Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC) have now been confirmed. There is much detail to be analysed, but it appears that the government has listened to some of the suggested unfairness in the proposals as laid out originally.  Further updates will follow later this week.

The national living wage is being increased by almost 10% to £11.44 p/h, which will have an impact on employers in hospitality and retail sectors.

The government is increasing HMRC’s debt management resource to allow HMRC to pursue those with tax debts that can afford to pay, and providing support to those that are temporarily unable to pay.  The government is also looking to reduce opportunities for tax fraud in the construction industry and to take strong action against promoters of tax avoidance schemes.

We’ll share a more in-depth analysis of the announcements later this week.

Apart from the national insurance rate cuts, it was a quieter Autumn Statement than expected, with no mention of income tax, inheritance tax or stamp duty. Perhaps the Chancellor is saving some ‘rabbit out of the hat’ moments for next year ahead of the General Election, likely Autumn 2024 - let’s wait and see…

Steve Wren | Tax Partner

Key Facts from the Autumn Statement 2023

  • 10%

    The reduced national insurance rate for employees earning more than £12,750 on earnings up to £50,270, from 6 January 2024

  • £11.44

    The new national living wage which has been increased by nearly 10%

  • 8%

    The reduced class 4 national insurance rate for self-employed workers on earnings between £12,570 and £50,270, from 6 April 2024