Will businesses be impacted by the 2023 Autumn Statement?

On 22nd November 2023, the Chancellor of the Exchequer Jeremy Hunt delivered the 2023 Autumn Statement to the House of Commons. The statement focused on forecasts produced by the Office for Budget Responsibility (OBR) and provided insight into the government's latest tax and spending plans for the new year and beyond. Fiscal statements like this often have implications for small businesses and therefore in this post, we’ll be focusing on the elements of this budget which could have impacts for small business owners up and down the country. 

To recap on the announcements made earlier in the year during the Spring Statement, visit our insight hub post; Key announcements from the Spring Statement.

The UK economy has been growing at a slow pace since the start of 2022. In the third quarter of 2023, ahead of this statement, GDP growth was reported to be at 0.6% compared to the previous year, reasons for this include high inflation and rising interest rates which have affected businesses for over 12 months now. Economists don’t expect interest rates to continue to rise and therefore this Autumn Statement forecasts that interest rates are expected to decline modestly in 2024 which should hopefully provide a slightly more positive outlook for businesses who have struggled with their finances over the past 12 months.

As for the Treasury’s priorities and announcements, a number of packages have been announced in the statement which could impact business owners over the coming year.

In today’s announcement, Hunt commits to honour ‘triple lock pensions’. In addition to this from April 2024, state pension will be increased by 8.5% to £221.20 per week. This change comes alongside the announcement of an increase to state benefits, which are set to increase by 6.7% in 2024. Furthermore, for private pensions, the Treasury will be consulting on the provision of a ‘one pension pot for life’ pension. This will give pension savers the right to ask new employers to pay their employer pension contributions directly into the employees own pension pot, as opposed to the current system which see’s new employees enrolled onto their employer’s own pension scheme.

One big announcement for businesses concerns the process for planning applications in the UK. The Chancellor has today confirmed that changes will be made to make planning applications faster, allowing local authorities to recover the costs of major business planning applications in return for meeting timely deadlines. If the applications fail, they will be processed free of charge.

Focusing on creating an AI powerhouse in the UK, the government have announced an additional £500m in funding for artificial intelligence projects, with the view to funding innovation hubs off the back of projects in Edinburgh and Bristol concerning the building of supercomputing centres.

A funding package of £4.5bn will also be invested into the UK’s manufacturing industry with support available between 2025 and 2030. This will be split across various sub-industries, including £975m for aerospace, £520m for life sciences and medical research as well as £960m for new green industry companies.

Finally, as part of a package of investments in the private sector, the Treasury will provide additional funding for apprenticeships in commercial and engineering sectors. This comes off the back of an announcement that the government wishes to reform A-levels and introduce an Advanced British Standard to upskill college leavers and get them ready for work. The apprenticeship funding will see £50m invested over the next two years.

Today, the Chancellor announced a continued 75% discount in business rates up to £110,000 for those in the hospitality, retail and leisure industries. Hunt announced this would be funded by an investment of £4.3bn into those industries. In addition to this, duty on hand-rolling tobacco will be increased by 10% above the tobacco duty escalator, which is 2% above the retail price index (RPI). Alcohol duty rates will be frozen until 1 August 2024 meaning that no increases in tax will be placed on beer, cider, wine or spirits.

The Treasury has announced that Class 2 National Insurance contributions will be abolished. Self-employed individuals will be able to make contributions if they wish to however there will no longer be a requirement to do so. This will not impact the individual's ability to claim benefits and a state pension in the future. Class 4 National insurance will also be reduced by one percentage point down to 8%. These changes are expected to save the average self-employed person £350 per year.

The National Living Wage will increase by over one pound per hour in April 2024 from £10.42 to £11.44. The higher wage will also be made available to people aged over 21, whereas previously this rate was only available for workers aged over 23 years. Employee National Insurance will be cut from 12% to 10%, this change will be moved forward from April and will be in force from the 6th of January 2024.

This statement focuses on many industries in the UK which are considered to be emerging, including green industries, artificial intelligence and manufacturing. An emphasis has been placed on skills, with funding introduced to get people back to work, something which could prove to have an impact for small businesses in the UK.

Find out more from the 2023 Autumn Statement at gov.uk.