Introduction

Jeremy Hunt’s second Autumn Statement was set against a much less financially turbulent background than his first. However, politics still loomed large with a likely election in the next 12 months prompting calls for tax cuts from within the Conservative party. Until recently the Chancellor had attempted to stall such demands with warnings of “difficult decisions” on the public finances owing to a worsened fiscal outlook since his Spring Budget. One reason that he highlighted for the deterioration was the sharply increased cost of government borrowing.

Nevertheless, the Chancellor, who had argued only two months ago that tax cuts were “virtually impossible”, appears to have had a change of heart. Echoing the Prime Minister, Mr Hunt suggested that the achievement of halving inflation in 2023 marked an economic inflexion point that permitted a new policy approach.

The outcome was an Autumn Statement that had been initially trailed as focusing on longer-term issues, but which prioritised short-term tax cuts over maintaining expenditure in later years. On the long term front, the Chancellor confirmed as expected that ‘full expensing’ of corporate investment in plant and machinery would be made permanent at a cost of £10.7 billion a year by 2027/28. The most headline-grabbing moves were cuts to national insurance.

Some of the rumours, such as IHT reform, did not come to fruition, but there is still a chance – the Spring Budget is now less than four months away.

Highlights of Autumn Statement

• The main rate of class 1 employee national insurance contributions (NICs) will be reduced from 12% to 10% with effect from 6 January 2024. The main rate of class 4 self-employed NICs will be cut from 9% to 8% from 6 April 2024 and class 2 will no longer be required.
• Full expensing of investments made by companies in qualifying plant and machinery will be made permanent and will therefore continue after April 2026.
• The main income tax allowances and thresholds, the main NICs thresholds plus the inheritance tax (IHT) nil rate bands will stay at their current levels for 2024/25.
• The new and old state pension as well as pension credit will rise by the full triple lock increase of 8.5% for 2024/25. Universal credit and most other benefits will increase by 6.7%.
• Investors will be allowed to make multiple subscriptions to ISAs of the same type each year from April 2024, when partial transfers of ISAs between providers will also be permitted.
• The national living wage will increase to £11.44 an hour.
• All alcohol duties have been frozen until August 2024.
• The government is seeking to persuade people with health conditions to find work. There is extra funding, as well as new sanctions for those who are found to be able to work but refuse to look for employment.