Autumn Statement

Yesterdays Autumn Statement marked a departure from the somber economic conditions of the previous year. Unlike the Chancellor’s cautionary tone about an impending “storm” of tax hikes, the fiscal scenario took an optimistic turn this time around. A 4.6% drop in inflation in October afforded Mr Hunt the opportunity to shift his focus towards tax reductions.

Facing a challenging political landscape and a looming election, Hunt introduced a bold narrative of “110 growth measures.” These measures encompassed a 2% reduction in the main rate of national insurance effective from January 6, alongside the extension of incentives for business investment, such as the permanent continuation of the full expensing initiative. Notably, class 2 national insurance was eliminated for the self-employed, and class 4 national insurance was reduced from 9% to 8%.

Individuals were not left out, as Hunt confirmed an increase in the national living wage for those aged 23 and over to £11.44 per hour starting April. In his address, Hunt emphasized the government’s commitment to tax cuts for various segments, stating, “We cut taxes to help bigger businesses invest, we cut taxes to help smaller businesses grow.”

The Chancellor highlighted the significance of these tax cuts, describing them as the most substantial in modern British history. He underscored the magnitude of the reductions, including the largest-ever cut to employee and self-employed national insurance and the most extensive package of tax cuts since the 1980s, positioning the Autumn Statement as a pivotal moment for the nation’s economic trajectory.

While the speech addressed calls for tax cuts from backbenchers, Hunt refrained from announcing alterations to inheritance tax or a 1% cut to income tax, leaving the possibility of these changes for the pre-election Spring Budget.

Key Tax Measures in the Autumn Statement:

  • Reduction of the main rate of national insurance to 10%
  • Abolition of class 2 national insurance contributions
  • Cut in class 4 national insurance
  • Permanent extension of the full expensing capital allowance scheme
  • Increase in the national living wage for those aged 23 and over to £11.44 per hour
  • Freeze on all alcohol duty until August 1, 2024
  • 8.5% increase in the state pension
  • Confirmation of the new merged research and development (R&D) scheme
  • Extension of freeports for another five years
  • 75% business rate discount for retail, hospitality, and leisure extended until 2025
  • Tax relief for visual effects expenditure

National Insurance Changes:

The Chancellor reserved the announcement of the 2% cut to the main rate of national insurance until the conclusion of the speech, surprising many. The implementation of this cut, set for January 6, 2024, is expected to benefit 27 million workers, with the average worker in 2024/25 paying over £1,000 less in personal tax than originally projected. Notably, this reduction follows a recent 1.25% increase in national insurance.

Hunt also addressed self-employed national insurance contributions, abolishing class 2 and reducing class 4 from 9% to 8%. These reforms are anticipated to save around 2 million self-employed individuals an average of £350 annually.


In a bid to stimulate UK investment, Hunt unveiled significant changes to ISAs, marking the most extensive reforms in over a decade. The simplifications precede an upcoming increase in the tax-free savings allowance threshold to £20,000.

The confirmation of the national living wage increase to £11.44 per hour from April was emphasized. While welcomed by lower earners, concerns about potential strains on struggling businesses were acknowledged, especially in light of a previous wage increase coinciding with a surge in business insolvencies.

Business Investment:

The Chancellor positioned business investment as a cornerstone of the Autumn Statement, leveraging higher-than-expected tax receipts to make the full expensing relief a permanent fixture. This extension aims to provide businesses with the confidence to engage in long-term investments beyond the original end date of 2026.

Despite positive reception from the business community, some critics, including Emma Rawson from the Association of Taxation Technicians, pointed out limitations in the definition of “full expensing,” noting exclusions of assets like land, buildings, cars, and assets purchased for leasing.

Additionally, Hunt simplified the R&D tax relief by merging the R&D expenditure credit and small or medium-sized enterprise (SME) scheme. This merger is expected to reduce the tax rate for loss-making companies within the merged scheme from 25% to 19%.

Investment zones featured prominently in the statement, with Hunt extending the Freeports scheme and tax reliefs for an additional five years. Three new investment zones were announced for the West Midlands, East Midlands, and Greater Manchester.

Economic Outlook:

Throughout the speech, the Chancellor emphasised the role of the announced initiatives and tax cuts in fostering economic growth. Hunt highlighted the significant drop in inflation from 11.1% to 4.6%, citing forecasts from the Office for Budget Responsibility (OBR) projecting a further decline to 2.8% by the end of 2024, reaching the 2% target in 2025.

Addressing the prime minister’s commitment to debt reduction, Hunt reported that underlying debt is projected to be 91.6% of GDP next year, rising to 92.7% in 2024/25, and then gradually decreasing to 92.8% in 2028/29. The OBR anticipates economic growth of 0.6% this year, 0.7% next year, and a rise to 1.4% in 2025.

In an effort to ensure tax compliance, Hunt pledged resources to HMRC, aiming to generate an additional £5 billion across the forecast period.

Looking Ahead:

While the Autumn Statement exceeded expectations, notable exclusions, such as inheritance tax and further details on stamp duty land tax (SDLT), prompted speculation about potential announcements in the Spring Budget. Hunt’s decision to refrain from addressing these issues in the current statement suggests a strategic approach, possibly reserving impactful changes for a later date, considering the constraints of an impending election.

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