Chancellor Jeremy Hunt has presented the Autumn Statement for Growth with the aim of lowering inflation, growing the economy and reducing the public debt. Read on to find out what changes in tax and spending were covered in the speech.

The economy and fiscal forecasts

  • The Office for Budget Responsibility (OBR) projects headline inflation to fall to 2.8% by the end of 2024, reaching the 2% target in 2025.
  • Underlying debt begins to fall from 2027-28 and then falls to 92.8% of GDP in the target year (2028-29).
  • Public sector borrowing expected to decrease from 4.5% this year to 1.1% in 2028/9.
  • UK economy forecasted to grow by 0.6% this year and 0.7% next year, with projections for 2025 (1.4%), 2026 (1.9%), and 2027 (2%). Notably, a downgrade for 2024 and 2025 from the OBR’s spring forecasts.

Taxes and duties

  • The National Living Wage will rise from £10.42 to £11.44 per hour from April 2024, an increase of 9.8%.
  • The new National Living Wage rate to apply to 21 and 22-year-old workers for the first time, rather than just those 23 and over.
  • The Chancellor announced National Insurance cuts for both employed and self-employed individuals.
    • The main rate of Class 1 NIC applied to employment income between £12,570 and £50,270 will be reduced by 2%, from 12% to 10%, effective from 6 January 2024.
    • Self-employed individuals will no longer be required to pay Class 2 NIC (currently £3.45 per week), saving £192 a year. Further to this, the Class 4 NIC rate will be reduced from 9% to 8% from April 2024 on profits between £12,570 and £50,270 .
  • The 75% discount on business rates up to £110,000 for retail, hospitality and leisure businesses will be extended for another year.
  • The small business multiplier for business rates will also be frozen for a further year.
  • The new and permanent ‘Full Expensing’ tax break will allow businesses to claim 100% corporate tax relief (up to 25%) on their plant and machinery investments in the year of purchase, as opposed to annual capital allowances over several years.
  • Alcohol duty will be frozen until 1 August 2024.
  • The government is committing a further £50 million for a two-year pilot to explore ways to stimulate training in growth sectors and address barriers to entry in high-value apprenticeships.

Cost of living support

  • The amount of free childcare that working families can access will be increased. All eligible working parents in England will be able to access 30 hours of free childcare per week for 38 weeks per year from when their child is nine months old, to when they start school.
  • The new full State Pension will increase from £203.85 per week in 2023-24 to £221.20 per week in 2024-25. This is an increase of £17.35 per week, or £902.20 a year.
  • Universal Credit and disability benefits will increase by 6.7%, in line with September's inflation rate.
  • The Local Housing Allowance rate will increase, which will give 1.6 million households an average of £800 of support next year.

Public sectors and government spending

  • Defense spending to be 2% of GDP.
  • Financial incentives for Investment Zones and tax reliefs for Freeports will be extended from five to 10 years.
  • A new target is being introduced for the public sector to increase productivity by at least 0.5% year.
  • The government plans to reduce the size of the Civil Service to pre-pandemic levels.

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