An Autumn Statement full of tax cuts?

Mark Tibbert, Partner and Head of Tax gives his take on the Autumn Budget today and what this means for businesses in the region.

In the days preceding the Chancellor standing up this afternoon to deliver his Autumn Statement we heard increasing speculation over potential tax cuts in the press and even more direct indications from the Chancellor and the Prime Minister. So did the promised cuts materialise?

Compared to previous Budgets there were some significant announcements. Throughout he made every effort to reiterate that his announcements were supported by the latest OBR figures and forecasts to give comfort that everything announced is economically supported. He also made clear that he intended his measures to encourage growth to drive economic prosperity and keep inflation and national debt under control.

In terms of the main announcements:

• For employees it is good news with a 2% cut in the main rate of National Insurance, down to 10%. Unusually he also said that this cut will take effect from January 2024 rather than waiting until April 2024. Alongside this, the largest increase in the minimum wage for the lowest earners to £11.44 from April 2024 will help see the majority keep a larger part of their earnings.

• For the self-employed it is a similar benefit with a 1% cut in the main rate of National Insurance, down to 8%, and the abolition of Class 2 National Insurance.

• For companies it was the expected news that Full Expensing, which provides companies with 100% tax relief on qualifying capital expenditure, will be made permanent. The aim being to encourage companies to look at investing in the UK to stimulate growth and increase employment.

• Although hidden within other comments about increasing funding to encourage investment in innovation and innovative sectors, he also confirmed they would be looking to combine the current two existing R&D schemes into a single scheme. We await details of what this might look like and what the impact will be on smaller businesses who have relied on the claim to help fund early development work.

• The last main relief was around Business Rates, which will be welcome for many businesses across the South West with the confirmation that the 75% discount for Leisure, Hospitality and Tourism businesses would remain for a further year. But it does look likely that this will be the last year.

What we didn’t get anything on, which had been talked about, were any changes to Inheritance Tax – this could be one for next year.

Whilst the tax cuts announced will benefit many, there are questions as to whether it is really a Statement that benefits businesses. With the tax cuts all aimed at employees or the self-employed, with increases in the minimum wage, increasing costs, and rates relief targeting only specific sectors, many businesses may find their costs increasing, especially employment costs. But with signs of an improving economy many remain hopeful for the coming year.

As always, we will be looking at the full detail of all the announcements and providing commentary on what this means for our clients and businesses across the South West over the coming days.