Autumn Statement 2023: a "game-changing" budget for growth

Chancellor of the exchequer Jeremy Hunt has unveiled what he calls "an Autumn Statement for growth", delivering "the biggest business tax cut in modern British history". The announcement was welcomed by the Federation of Small Businesses as "game-changing".

With inflation down, some much-needed fiscal headroom and a general election on the horizon, chancellor Jeremy Hunt has delivered an Autumn Statement designed to have wide appeal for taxpayers and business owners alike.

The headline news for taxpayers is a 2% cut in employee national insurance contributions, reducing the NIC rate from 12% to 10% from 6 January 2024. For the average worker earning £35,400 a year, that amounts to an annual tax cut of over £450.

Other key announcements include:

• The national living wage will rise to £11.44 from April 2024 and will be extended to 21-year-olds.
• The state pension will increase by 8.5%, from April 2024.
• Universal Credit and other working age benefits will increase by 6.7% in April.

For businesses, Hunt has promised 110 growth measures. The headline announcement for self-employed workers is the abolition of Class 2 National Insurance contributions, cutting tax for two million people from April 2024. In addition, Class 4 contributions will be reduced from 9% to 8%. Together these cuts are worth an average of £350 a year for those earning £28,000 a year.

Other key announcements for businesses include:

• "Full expensing" is to be made permanent, allowing businesses to claim 100% capital allowances on qualifying investment in IT equipment, plant and machinery.
• A business rates support package worth £4.3 billion over the next five years includes a rollover of 75% retail, hospitality and leisure relief for 230,000 properties and a freeze to the small business multiplier.
• Four new investment zones are to be created in Wrexham, Greater Manchester, and the west and east Midlands.
• SMEs will be supported with tougher regulation on late payers to improve prompt payments.

Good news for small businesses

"We are backing small business by freezing their business rates, extending retail, hospitality and leisure relief, abolishing compulsory Class 2 National Insurance payments and reducing Class 4 National Insurance by one percentage point in today's Autumn Statement for growth. Small businesses work so hard for us, so this government is working hard for them." Chancellor of the exchequer Jeremy Hunt.

This Autumn Statement has been generally well-received by business groups. Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said: "Jeremy Hunt has today taken very welcome action on late payments, small businesses' rates, and self-employed taxation. This game-changing small business package shows the prioritisation of pro-growth measures where they will do most good."

Shevaun Haviland, director general of the British Chambers of Commerce (BCC), said: "We are pleased the chancellor has listened to our calls to help businesses deal with the current economic challenges. Today's statement provided some welcome remedies at a time when businesses of all sizes need certainty and security from the government in the difficult months ahead."

Autumn Statement 2023: Small business reactions

Andy Chamberlain, director of policy, IPSE: "We're pleased the chancellor has recognised the vital contribution of the self-employed sector to the UK economy, backing this with a cut to Class 4 national insurance. The abolition of Class 2 NI is a welcome simplification and will particularly benefit the self-employed on low incomes. Whilst it's a welcome relief to feel there is some support on offer from government, the self-employed sector is still reeling from gaping gaps in support during the pandemic and the implementation of the off-payroll working rules, which have had a devastating impact on hundreds of thousands … the government still has much more to do to win back the support of the sector."

Tina McKenzie, FSB policy chair: "When it comes to late payment, business rates and self-employed tax, it is unquestionably clear that the voice of small business has been heard today. This game-changing small business package shows the prioritisation of pro-growth measures where they will do most good, while getting the best bang for the taxpayer buck."

Roan Lavery, co-founder and ceo of FreeAgent: "There's a lot of good news for small businesses in today's Autumn Statement - not least the surprise announcement that Class 2 National Insurance will be abolished. It's also encouraging to see that the government is starting to take the issue of late payment seriously … However, I would have liked to see the chancellor be much bolder about the late payment issue by giving greater powers to the Small Business Commissioner to clamp down on all late payers or by mandating the Prompt Payment Code. Nevertheless, this is still the most positive Autumn Statement or Budget that there has been for small businesses in quite some time."

Tom Minnikin, partner at tax firm Forbes Dawson: "Obviously, this will be welcome news for the employed and self-employed, who will benefit from paying lower National Insurance going forward. However, the measure does nothing to help company owners who typically remunerate themselves via dividends as opposed to salary."

Jonathan Andrew, ceo of Bibby Financial Services: "We welcome the permanent adoption of 100% full expensing on qualifying capital spending … this will give SMEs a massive confidence boost and underpin their resilience. It presents an opportunity for SMEs to do something different to stay ahead of the competition, whether by investing in cutting edge equipment that improves productivity or by pivoting their business offering."

Written by Rachel Miller and Fiona Prior.