Jeremy Hunt, the British Chancellor of the Exchequer, unveiled a series of tax reductions tailored to stimulate economic growth in the country during his Autumn Statement 2023.
In his address to the House of Commons, Hunt emphasized a departure from extensive government control, advocating instead for decreased debt, tax cuts, and the recognition of diligent work. His proposed measures encompass a reduction in the primary National Insurance rate, set to drop from 12 per cent to 10 per cent starting January 2024, impacting approximately 27 million British workers. Furthermore, tax simplifications and cuts are on the horizon for about two million self-employed individuals.
The aggregate value of this tax relief plan exceeds £9 billion annually, marking the most extensive reduction for both employees and the self-employed. The Office for Budget Responsibility (OBR), an independent body, estimates these cuts will prompt an additional 28,000 people to enter the workforce, as per a statement from the Treasury.
The Treasury assured that the reduction in National Insurance rates would not affect NHS funding or pension disbursements, pledging that services would persist uninterrupted and funded as currently allocated.
Scheduled for April 2024, the National Living Wage, the statutory minimum wage, will witness an uptick of nearly 10 per cent, rising from £10.42 to £11.44 per hour.
In support of businesses within the UK, Hunt introduced the “Full Expensing: Invest for Less” enduring tax reduction initiative. This measure allows companies to offset their investments in information technology equipment, plants, and machinery against their tax liabilities. Hunt underscored that this initiative translates to a deduction of £250,000 for every million pounds invested, culminating in an £11 billion annual cost and marking the most substantial business tax cut in recent British history.
Additionally, Hunt announced an 8.5 per cent increment in the country’s state pension, effective April 2024, while Universal Credit and other benefits pertinent to working-age individuals will receive a 6.7 per cent boost in April, aligning with September’s inflation rate.
The OBR’s economic projections foresee a growth rate of 0.6 per cent for the current year, escalating to 0.7 per cent in the following year and reaching 1.4 per cent in 2025. Concurrently, the OBR anticipates headline inflation to decline to 2.8 per cent by the conclusion of 2024, ultimately converging with the Bank of England’s 2 per cent target for 2025.
