Chancellor Jeremy Hunt has delivered his latest Autumn Statement, detailing lots of initiatives that the government believe will help reduce inflation and boost the UK’s economy. Whilst a lot of changes were announced, Leanne Grant has summarised our key takeaways below that will most effect you, your business and your employees.

National Insurance Rates

From 6th January 2024, the rate of national insurance for employees is being cut by 2%, looking to impact around 27 million workers in the UK. Those who earn between £12,570 and £50,270 currently pay 12% national insurance on their earnings – this is being reduced to 10%. Using the example Mr Hunt used in his statement, an employee earning £35,000 a year will save around £400 annually in national insurance contributions – a rather significant amount given the current cost of living crisis.

Minimum Wage

Often referred to as the national living wage, this will rise to £11.44 an hour from April 2024. With the current rate being £10.42, this is a £1.02 rise for all those living in the UK over the age of 21 – an eligible age that has been brought down from 23. For those aged between 18 and 20, the minimum hourly rate will rise by £1.11 to £8.60 per hour. 

This is a rise of 9.8% and worth up to £1,800 for a full-time worker. Hunt says this decision is “the largest ever cash increase” in the National Living Wage.

R&D Tax Relief

The autumn statement confirmed that the government intends to merge the RDEC and SME Research & Development (R&D) schemes from April 2024.

Until now, a company was considered to be R&D intensive if 40% or more of its total expenditure was ‘qualifying R&D’ expenditure. This has been reduced to 30% meaning more companies will benefit from the higher R&D relief available.

Tax Thresholds

Once again, no change has been made to the tax thresholds at which people start paying ta (or start paying tax at a higher rate). Because of inflation, this means people will be paying tax and at a higher rate.

Late Payments

As part of an initiative to address the problem of late payments, from April 2024 any business bidding for government contracts worth over £5m will need to show that they pay their own invoices within an average of 55 days (reducing to 45 days from April 25).

Macro-economic stats

The Office for Budget Responsibility (OBR) has predicted an average inflation rate of 2.8% by the end of 2024, and 2% by 2025. “Overall” UK grow for 2023 is seen to be 0.6%, 0.7% for 2024, and then doubling to 1.4% in 2025. With this, they are hoping the Bank of England base rate will return to 2% by 2025. 

An interesting round up to draw Autumn of 2023 to a close. Follow us for the latest updates and developments related to all things Autumn Statement.