Against the backdrop of a cost-of-living crisis, a near-stagnant economy and a looming election, the 2023 Autumn Statement was seen to reflect a pivotal moment in the UK’s economic trajectory. Jeremy Hunt presented his Autumn Statement 2023 with a focus on promoting stability and growth. During the announcement, Hunt introduced 110 measures to boost growth, including making it simpler to raise capital and cutting business taxes. These measures aim to “remove barriers to investment” and are projected to increase GDP as per the OBR. Hunt has referred to the statement as an “Autumn Statement for growth.” Jeremy Hunt has announced what he calls the biggest tax cuts for business in modern British history in his Autumn Statement 2023.

Business Changes

Full Expensing

Hailed as a key feature of what the Chancellor called “the largest business tax cut in modern British history,” one of the most significant business announcements was Hunt’s decision to make the full expensing scheme permanent. Full expensing provides 100% first-year relief to companies on qualifying main rate plant and machinery investments, including IT equipment. Initially introduced in the Spring Budget 2023, the scheme was due to expire in March 2026. The Government predicts this will unlock an additional £14bn in investment over the OBR’s forecast period, helping to drive sustainable economic growth.

R&D Tax Credit Merge

The Autumn Statement 2023 ushered in significant reforms to R&D tax relief to foster innovation across the business landscape. From April 2024, the current R&D expenditure credit (RDEC) for larger businesses and the SME R&D scheme for smaller enterprises will merge into one scheme. This will reduce the tax rate for loss-making companies from 25% to 19% and lower the threshold for additional support from 40% to 30%, expanding eligibility to about 5,000 more SMEs. Companies fluctuating below the 30% threshold will also receive a one-year grace period, allowing more businesses to become classified as ‘R&D-intensive’. These reforms are expected to provide an additional £280m in relief annually by 2028/29. However, it’s currently unclear which companies will benefit most from the consolidation of the two schemes: SMEs or larger businesses.

Investment Zones

Hunt has announced the establishment of four new investment zones – which he refers to as “mini-Canary Wharfs” – in the West Midlands, East Midlands, Wales and Greater Manchester. These zones will focus on advanced manufacturing and are expected to attract approximately £3 billion in private investment, leading to the creation of around 65,000 new jobs.

Manufacturing

Hunt discussed investment and announced an additional £4.5bn of support between 2025 and 2030 for “strategic manufacturing”. This financial aid includes £975m for aerospace firms, £520m for life sciences, such as medical research companies, and £960m for new green industry firms. He stated that, collectively, this support for the fastest-growing innovation sectors will attract an estimated £2bn of additional investment per year over the next decade.

AI

The UK government has recently announced an investment of £500m over the next two years to establish new “innovation centres” aimed at strengthening the country’s position as a leading AI hub. This move comes after the success of the supercomputing centres in Edinburgh and Bristol.

Planning application

Plans to improve the planning system by allowing local authorities to charge the full cost of major business planning applications in exchange for meeting faster processing timelines. If the authorities fail to deliver on these timelines, the fees will be refunded automatically, and the application will be processed free of charge. Hunt said this will be similar to a prompt service or a refund policy in the private sector.

EIS and VAT

The sunset clauses on EIS and Venture Capital Trust (VCT) schemes will both be extended to 2035. A total of £18.2 billion has been raised through EIS over the last decade.

Rewarding Work

National Insurance 

The National Insurance rate will be cut from 12% to 10%. Hunt says the main employee National Insurance rate will be cut by 2 percentage points from 12% to 10% from 6 January 2024. He says the change will help 27 million people and means someone on an average salary of £35,000 will save over £450 a year. Hunt says: “I would normally bring in a measure like this for the start of the new tax year in April, but instead tomorrow I’m introducing urgent legislation to bring it in from 6 January, so that people can see the benefit in their payslips at the start of the new year.”

National Insurance Paid By Self-employed

Self-employed people earning over £12,570 will no longer have to pay the “Class 2” National Insurance charge of £3.45 per week. He says that it will save the average self-employed person £192 a year. Starting from April 2024, the Class 4 National Insurance on all earnings between £12,570 and £50,270 will be reduced from 9% to 8%. This will result in an average saving of £350 per year for approximately two million self-employed individuals when combined with the removal of the compulsory Class 2 charge.

National Living Wage Rise

As announced at the 2023 Tory Party Conference, the Living Wage for those aged over 21 will rise from £10.42 to £11.44 per hour. It will come into effect in the spring of 2024. The increase is worth £1,800 a year for the average full-time worker.

Pensioners

The state pension will increase by 8.5% next year, in line with average earnings. It will reach £221 a week from April.

Expert Guidance and Support

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