Jeremy Hunt delivered his Autumn Statement on 17 November, just over a month after he was appointed Chancellor of the Exchequer.
The statement arrives as the UK falls into a recession and the cost of living crisis hits many individuals and businesses across the country.
Hunt promised to deliver stability and growth to the economy, and announced a number of measures to help curb inflation and plug a £55 billion “hole” in public finances.
Here are some key points you’ll need to know, and how the changes will affect both individuals and businesses.
The Office for Budget Responsibility (OBR) published an economic forecast alongside the Autumn Budget.
Although the OBR said that the economy will have grown by 4.2% this year, it also confirmed that the UK is now in recession, and 2023 will see the economy retract by 1.4%.
The OBR estimated that the recession would be 1.1% deeper without recent measures such as the energy price guarantee.
GDP should then rise by 1.3%, 2.6% and 2.7% in the following years, finally returning to pre-pandemic levels at the end of 2024.
The forecast said that GDP peaked at 11% this year and will drop “sharply” in 2023, returning to the Government’s target of 2% in 2027.
However, current inflation rates will reduce wages and living standards by 7% over the next two financial years, wiping out eight years of growth.
The chancellor announced several measures that will affect individuals and self-employed people across the country.
One significant measure was lowering the additional rate tax threshold from £150,000 to £125,140 a year in England, Wales and Northern Ireland.
It’s predicted that a further 250,000 taxpayers will pay the 45% top tax rate on their earnings as a result.
Capital gains tax allowance and annual exemption allowance will be cut from £12,300 to £6,000 for the 2023/24 tax year, then slashed to £3,000 in 2024/25.
Meanwhile, the tax-free dividend allowance will be cut from £2,000 to £1,000 in April 2023, finally falling to £500 in April 2024.
The Chancellor also announced a change to the energy bill support scheme for households, which will now span six months until April 2023 instead of two years.
The threshold for both the personal allowance for income tax, and the point at which individuals must pay National Insurance Contributions will remain at £12,570 until 2028.
Meanwhile, the inheritance tax threshold, which has not been changed since April 2009, will be frozen at £325,000 until 2028.
The Chancellor confirmed that a business rates revaluation will still take place in April 2023, but announced a set of changes.
Business rate multipliers will be frozen in 2023/24 at 49.9p and 51.2p instead of rising to 52.9p and 54.2p, respectively.
Relief for the retail, hospitality and leisure sectors will increase from 50% to 75% – equating to £110,000 per business in the 2023/24 tax year.
A transitional relief scheme will be implemented to help UK businesses adjust to changes in bill increases following the revaluation of business rates.
Furthermore, some smaller businesses may receive targeted support, with a new “supporting small business scheme” capping bill increases at £600 for eligible businesses.
Research and development
The rates for research and development (R&D) relief schemes are also changing, with SME R&D relief decreasing from 130% to 85% and the SME credit rate decreasing from 14.5% to 10%.
At the same, the R&D expenditure credit will increase from 13% to 20%. Hunt claimed this would also help address fraudulent claims in the SME scheme and rebalance the two reliefs.
Understanding the Autumn Statement
The Chancellor’s inaugural statement’s effects will be far-reaching. Following these measures and confirmation that the UK is in recession, many people and businesses will see significant changes in their finances and tax obligations.
Understanding exactly what will change for you and your business can be complicated. Speak to an expert today to find out how the Autumn Statement will affect you.