Chancellor backs British businesses in ‘Autumn Statement for Growth’
Tax cuts for working people and British businesses have headlined in Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ on Wednesday 22 November.
A key highlight of the Autumn Statement is the plan to slash taxes for 29 million workers. Starting January 2024, Employee National Insurance will be reduced by two percentage points, from 12% to 10%. This significant cut is projected to save the average worker earning £35,400 annually over £450 each year. This immediate financial relief is a part of the government's broader strategy to improve living standards and reward hard work as it builds an economy geared towards the future.
The Chancellor's plan also extends benefits to the self-employed sector. From April 2024, Class 4 National Insurance Contributions (NICs) for the self-employed will decrease from 9% to 8%, and the obligation to pay Class 2 NICs will be eliminated. This reform translates to an annual saving of £350 for the average self-employed individual earning £28,200. Combined, these cuts represent an over £9 billion annual reduction in taxes, the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) forecasts these reductions will bring an additional 28,000 people into the workforce.
Businesses are set to benefit from what is being hailed as the biggest business tax cut in modern British history. The Chancellor announced the permanent implementation of Full Expensing: Invest for Less, targeting investments in IT equipment, plant, and machinery. This move, effectively an £11 billion yearly tax cut, is expected to boost business investment by £14 billion over the forecast period, reinforcing the UK’s position with the most competitive tax environment in the G7 and the OECD.
Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade:
- Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p
- Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18
- SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow
- The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system, and boosting innovation in the UK
- The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs
- The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics, and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the net zero transition
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities:
- £4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy
- The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure
- Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade
- The Investment Zones programme and freeport tax reliefs will be extended from five years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities
- Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up
- £500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain
- The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK
- To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors