Autumn Statement 2023

The delay to the Autumn Statement certainly paid off in terms of increasing the Government’s ability to give sweeteners to both businesses and employees. The fiscal headroom of around ￡20bn, which emerged in the last few weeks, allowed the Chancellor to announce the permanent extension of expensing for Capital items which is something business had been lobbying for since full expensing had been introduced. He was also able to give relief to small businesses in terms of business rates.

On the personal finance side, he was able to give a substantial reduction in the rate of National Insurance contributions, taking it down to a level not seen for two decades. Combined with the substantial increase for the threshold of employee NIC from approximately ￡9,500 to ￡12,570 employees have seen a substantial reduction in their NIC burden.

The 110 measures which the Chancellor flourished as evidence of the Government taking initiatives were concentrated on business taxes and NI. Conspicuous by their absence were any measures regarding Income Tax, Capital Gains Tax or Inheritance Tax (IHT). There had been a significant number of rumours that IHT would be cut substantially in this statement; none of them came to pass. The conclusion that one could draw is that Jeremy Hunt is saving any tax announcements until the Spring Budget where, if the economy grows better than the very limited assumptions by the Office for Budgetary Responsibility (OBR), there should be more headroom to make “responsible” tax cuts.

Giving himself two bites of the cherry with the employee NIC cut taking effect from January 2024 and any Income Tax cut/IHT cut in the late spring of 2024 makes it more likely that they will be noticed. My view is that this makes a Spring election much less likely. An Autumn election would give time for the full effect of the NI and any future tax cuts to be felt by the electorate.