The Autumn Statement was delivered by Chancellor Jeremy Hunt, in terms of public finances, and was anticipated as a full-fledged budget that delivered a double feature of record-breaking tax increases.
In order to promote stability, safeguard economic growth, and keep funding public services. Chancellor Jeremy Hunt presented the Autumn Statement, he primarily increased taxes by relying on budgetary drag and threshold freezes rather than direct rate increases.
The goal is to promote medium-term growth through investments in infrastructure, energy independence and efficiency, and targeted business support.
The following is a summary of Mr Hunt’s major tax announcements in his Autumn Statement:
Wages and Taxes
Increase in the minimum wage – The so-called national living wage, which will increase from £9.50 to £10.42 an hour for workers over the age of 23, will benefit over two million low-paid workers, giving them an additional £1,600 in annual pay. The hourly rate for those between the ages of 21 and 22 will increase by 10.9% to £10.18, while it will increase by 9.7% for those between the ages of 18 and 20 to £7.49. An increase of 9.7% will bring the minimum wage for apprentices and those in the 17–18 age bracket to £5.28 per hour.
The income tax threshold was frozen. This will be one of the most unpleasant parts of the budget, forcing millions to pay more when their incomes rise, with the average earner paying about £2,500 more over six years. The £12,570 income tax and national insurance levels will remain in force until April 2028, raising an additional £5 billion for the Treasury.
The National Insurance threshold was frozen. NI will stay at its current levels for an additional two years, until 2028. Ensuring that more people will continue to pay higher rates as salaries increase.
Council tax increases – Instead of being limited to 2.99% increases without a vote of the people, local governments will be allowed to raise the fee by 4.99%.
More people will pay 45p income tax – A quarter of a million high earners would be moved into the highest tax bracket after the threshold was lowered from £150,000 to £125,000, paying an additional £580 in taxes annually on average.
Tax on Capital Gains – Mr Hunt confirmed a reduction in the capital gains tax threshold on sales of shares and second residences, from £12,300 to £6,000.
Dividend taxes – Those who gain from the sale of shares will be subject to a 1.25% rate increase and a £1,000 reduction in the dividend tax threshold.
Inheritance tax – A rate of 40% will be charged on estates worth more than £325,000 for an individual and £650,000 for a couple under the terms of a prolonged rate freeze until 2027–2028.
Stamp duty reductions – The mini-reductions budget in stamp duty will last only through March 31 of 2025. According to Mr Hunt, OBR predicts a slowdown in home activity over the next two years.
Cost of Living and Energy Costs
In his Autumn Statement, the Chancellor said that energy costs for the average household will increase to £3,000 per year from the current £2,500 in April.
Additional cost-of-living payments of £900 for benefit recipients, £300 for retirees, and £150 for recipients of disability benefits are made to the “particularly vulnerable” people.
Rent controls, the government will limit social rent increases in 2023–2024 to a maximum of 7%, saving the typical tenant £200 per year.
Windfall tax, In a move that is expected to raise almost £45 billion over the course of five years, Jeremy Hunt announced a 35% tax on oil and gas firm profits. The measures are expected to collect £14 billion for the Treasury, and electricity generators will also be subject to a temporary 45% fee.
Compensation and State Pension
State pension after weeks of worry and the possibility of a Tory uprising, included in his Autumn Statement Mr Hunt promised that these will rise by 10.1%, which will be a huge relief to struggling retirees. An increase of £18.70 per week will therefore be felt by the typical pensioner.
Similar to other benefits Universal Credit is expected to increase in step with inflation. A single person over 25 receiving Universal Credit will see their payments increase by approximately £34 per month, though there will be a significant variance depending on their circumstances.
Crackdown on benefit fraud according to the Chancellor’s Autumn Statement, the DWP will receive £280 million to combat fraud and errors. Managed migration the government will push back the planned switchover of ESA recipients to Universal Credit until 2028, adding a further FOUR years to the already lengthy wait.
Financial System and the Economy
According to the Office for Budget Responsibility, the UK is in a recession, which means that the economy has slowed for two consecutive quarters.
It forecasts 4.2% overall growth for this year, but 1.4% economic growth in 2023.
For 2024, 2025, and 2026, growth of 1.3%, 2.6%, and 2.7% is anticipated.
The expected inflation rate for the UK is 9.1% this year and 7.4% the following year.
An expected increase in unemployment from 3.6% to 4.9% in 2024
Instead of the current three years, the government would give itself five years to meet its debt and spending goals.
Government Spending
Public spending – Mr Hunt stated that public spending would increase “slower than the economy” and that the government would protect the increases in departmental budgets that have already been established in cash terms before increasing resource spending at a rate of 1% per year in real terms over the following three years.
Public sector pay – The chancellor did not provide any details regarding the government’s plans, but according to documents, “the government is requesting recommendations from Pay Review Bodies where relevant, for pay awards for 2023–24.”
Spending on the NHS Mr Hunt indicated that the NHS budget would increase by £3.3 billion over the next three years, in addition to additional investment for social care of up to £2.8 billion in 2019 and £4.7 billion in 2020.
Mr Hunt promised to preserve the defence expenditure at 2% of GDP or less, but he would not commit to the previously promised 3% by 2030.
Spending on foreign aid will remain at 0.5% for the next five years, falling short of the official 0.7% target.
Infrastructure and Business
Tax on electric vehicles – Currently, electric vehicle owners are exempt from paying tax, however, this will change in 2025–2026.
The Chancellor announced that the East-West rail project as well as HS2 and Northern Powerhouse would move forward. HS2 would be delivered to Manchester. Over the next five years, Mr Hunt promised to invest more than £600 billion in capital projects.
Employer National Insurance – This has been frozen until 2028, meaning businesses will contribute 13.8% of all employees’ salaries over £9,100 annually. This step will generate about £5 billion annually.
Support for businesses with business rates worth £13.6 billion over the next five years, including a combination of freezes and reliefs
For a two-year period, import duties were lifted on more than 100 products, including several food items.
Plans for a potential online sales tax were shelved because, according to the government, business rate increases would affect online merchants’ warehouses more severely than their stores.
NHS and Social Services
The Chancellor pledged an increase in spending for adult social services of £1 billion next year and £1.7 billion the year after.
British citizens will pay more for social care for an extended period of time after the Government postponed a planned cost cap. The government had originally promised to implement a lifetime ceiling of £86,000 on how much anybody would have to pay for care starting in October 2023; however, this was postponed by two years.
NHS: According to Mr Hunt, in order to save money, approached Patricia Hewitt for advice on how local NHS organisations should run. However, he promised to raise the NHS funding to £3.3 billion in each of the following two years.
Education
Funding for schools – According to Mr Hunt, an additional £2.3 billion will be spent on schools annually over the next two years.
Lastly…
Hard times were already anticipated for many businesses, and the budget announcements confirmed recently are mostly reasonable. There is little room for improvement, and it is obvious that we are merely surviving. No short-term solutions for the problems the UK are facing today, stronger economic growth requires a long-term strategy, dedication to economic development and increased investment need to take centre stage.
Additionally, you can read our most recent blog post, Mini-Budget Updates prior to the Autumn Statement.
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