As we continue to speed through November, it can only mean one thing; the Autumn Statement is just around the corner.
The Autumn Statement gives Chancellor of the Exchequer, Jeremy Hunt the opportunity to update the nation on the government’s plans for the economy, informed by the Economic and Fiscal outlook provided by the Office for Budget Responsibility.
With the government adamant that this year’s statement will not focus on tax cuts, but rather on curbing inflation, we have shared some of our predictions for the Autumn Statement next week, and what they could mean for you.
Our predictions for businesses
On the back of the COVID-19 pandemic and ensuing ‘cost-of-living crisis’, businesses continue to look to the government for enhanced support. We can hope to see a few measures that may help to recover the economy, spanning from business tax reliefs, to increased National Living Wage and employee wellbeing tax incentives.
The government has previously introduced a retail, hospitality and leisure business rates relief scheme, through which eligible businesses can deduct 75% of their business rates bills. At first, this was 50% but was more recently extended to 75% for 2023/24. With the relief set to end on 31 March 2024, business groups such as UK Hospitality have called on the government to extend the relief scheme for another year, which is likely to be included in the statement if so.
At the 2023 Spring Budget, the Chancellor introduced a new capital allowance regime, known as ‘full expensing’. This offers companies 100% first-year relief to companies on qualifying new main rate plant and machinery investments until 31 March 2026. Although a temporary allowance for now, Hunt explained how the full expensing allowance would be made permanent ‘when fiscal conditions allow’. Bearing this in mind, it could be a topic to look out for in next week’s statement!
It is also expected that the Chancellor will officially announce an increase to the National Living Wage (NLW) from April 2024. The government has already accepted the Low Pay Commission’s recommendation to increase the NLW from £10.42/hour to over £11/hour for workers aged over 23. The Autumn Statement could be the prime opportunity to confirm the exact wage and outline any changes to the minimum wages.
Earlier this year, HM Treasury launched a consultation on ‘tax incentives for occupational health’. This discussed the value of employer-led occupational health services, and the role they could play in boosting workforce participation to reduce cases of long-term sickness. Occupational health refers to various services that promote wellbeing in the workplace, as well as those that support employees with health conditions to remain in work or to return comfortably from absence. With a 23% increase in economic inactivity due to long-term sickness over the past decade, there is the potential for the government to announce plans for tax breaks and subsidies to companies investing in occupational health.
Our predictions for you
Although the Chancellor has already disclosed that tax cuts are unlikely to feature in the statement, many still wait in anticipation to find out whether inheritance tax will receive a cut. Currently, you are able to leave an estate up to a threshold of £325,000 without being subject to the 40% inheritance tax levy. This threshold has been frozen since April 2009, so would be a great deal higher by now if it had risen in line with inflation throughout the past decade. As one of the more unpopular taxes, it’s thought that an increase to the inheritance tax threshold could be announced at the Autumn Statement, pleasing a number of voters.
It is thought that we could see a complete shake-up of the UK’s Individual Savings Accounts (ISAs) scheme at the statement next week, as the government aims to encourage more people to utilise the tax-advantaged saving schemes. This could include increasing the annual tax-free ISA allowance, or boosting the schemes that encourage investment in UK-listed companies.
The government has a legal obligation to increase the basic and new State Pension each year at least in line with average earnings. However, in the 2011/12 financial year, they introduced the ‘triple lock’, which extends their legal requirement, to increase State Pension by whichever is highest out of average earnings growth, consumer prices inflation (CPI), or 2.5%. However, due to this year’s average earnings, it seems that pensions would see an 8.5% rise, should the government remain committed to the triple lock. Bearing this in mind, it’s thought that the Chancellor may announce a slight adjustment to the rules, so the average earnings doesn’t consider bonuses as part of full earnings.
The Autumn Statement will take place around lunchtime on Wednesday, 22nd November – watch this space for our highlights and full summary to follow!
If you would like to seek further accounting and tax advice, please don’t hesitate to get in touch with a member of our team on 01942 816 512, or via email:
Chris Barlow, Tax Manager: [email protected]
Paul Murphy, Audit & Accounts Manager: [email protected]