Taking the temperature on the Autumn Statement initially, there wasn’t too much to get excited about, although perhaps staying away from controversy was the point all along…

When Jeremy Hunt, the Chancellor of the Exchequer, took his station just over a year ago, one of his first moves was a reversal of most of the measures announced in Kwasi Kwarteng’s mini-budget, followed by an Autumn Statement full of tax hikes, aimed at restoring market stability. Given that the next general election must take place before the end of January 2025, now is not the time to risk anything that could spook the markets.

The Autumn Statement comes a week after the latest UK CPI figures, which saw inflation at 4.6% in October down from 11.1% in October 2022, meeting the government’s promise to halve inflation by the end of the year. Consequently, it was no surprise that Hunt began by celebrating the lack of recession in the UK, rising real incomes and successfully halving inflation.

Let’s look at some of the notable announcements:

National Living Wage

Ahead of the statement, it was announced that the national living wage is to increase by almost 10%, to £11.44 an hour in April next year. This was confirmed during the statement alongside working age benefits increasing by 6.7%, and the state pension due to increase by 8.5%, in line with earnings growth.

The state pension increase was announced as part of a commitment to the triple lock, which is always subject to scrutiny and speculation ahead of a statement or budget, and perhaps more so this time around given the recent high level of inflation and subsequent high wages spells a large boost two years on the run for the state pension.

National Insurance Cut

The closest to a rabbit out of the hat moment came with the cut to national insurance contributions, which got quite the whoop and cheer.

What does this mean? Essentially, for workers, this is more money in their pockets.

For those who are self-employed, the flat rate class 2 contributions are being abolished, saving those who currently pay £192 per year. Furthermore, for those who are self-employed, class 4 national insurance contributions will reduce by 1%, from 9% to 8%, resulting in someone who is self-employed, earning £28,200 saving £350 in 2024/25.

Typically, those who are employed pay 12% national insurance on their earnings between £12,570 and £50,270, and anything over this at a rate of 2%. The statement revealed that the main 12% rate will be cut to 10%. For someone earning £35,400, this represents a tax cut of £450, and ultimately will benefit 27 million people.

Business Support

Turning to business, full expensing, which was first announced in the spring statement, has now been made permanent, allowing companies to deduct the cost of plant and machinery investment from pre-tax profits. Furthermore, the existing 75% business rates relief for eligible retail, hospitality and leisure properties is being extended through another tax year.

Investment Zones

New zones were added to the government’s investment zone scheme, which identifies areas that will be targeted for economic growth. A brief announcement on this topic pricked up our ears – the addition of a new investment zone to be created in Wrexham and Flintshire!

EIS and VCT Sunset Clause

Two specialist investment initiatives that incentivise investment in small, UK companies, were touched upon: Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT).

These two types of investment hold only companies that HMRC deem qualifying, and can provide tax relief for some investors.

The sunset clause on these investments, ending tax relief for new investors in 2025, has been extended to 2035.

ISA

Hidden in the detail was the announcement that multiple ISA subscriptions of the same type will be allowed in the same year from April 2024. Currently, you are only able to invest in one type of each ISA each tax year.

What does this mean? Essentially, there is a bit more flexibility surrounding ISAs. For example, if I wished to open a cash ISA with £5,000 and then a stocks and shares ISA with another £5,000 in this tax year, that wouldn’t be a problem, but if I wanted to then open another cash ISA, this wouldn’t be allowed, as it would mean opening two cash ISAs in one tax year. The change in the Autumn Statement means that, from April 2024, this will be permitted.

Otherwise, there were no changes to ISA subscription amounts.

Lifetime Allowance

We were pleased to see some clarification of the abolition of the lifetime allowance in a policy paper published yesterday, which we’re digging into for further information.

Lastly, What Wasn’t in the Budget?

There were many announcements that were rumoured ahead of the statement, many of which didn’t materialise at all, including a cut to income and inheritance tax rates.

There also wasn’t much to be seen by way of first-time buyer support – despite murmurings that we could see a change to stamp duty, nothing materialised. However, there was an extension in the Mortgage Guarantee Scheme to the end of June 2025, supporting availability of 95% loan to value mortgage products.

Over the coming days, we’ll take the time to digest the announcements, and what they mean for you, and we’ll be back next week with more detail.