Chancellor Jeremy Hunt said that his Autumn Statement budget plan, in which he announced tens of billions in tax rises and spending cuts, provided a “balanced path to stability” He also made it clear that his priorities were stability, growth and public services.
Here are the key facts of the announcement:
Forecast:
The Office for Budget Responsibility (OBR) reported that living standards will fall by 7 per cent over the next two years despite £100 billion in additional fiscal support.
The OBR also predicts that the UK’s recession will last just over a year and GDP will fall by around 2 per cent.
However, that is a more shallow recession than predicted by the Bank of England who, earlier this month, forecast it would continue until the middle of 2024.
UK’s inflation rate is predicted to be 9.1% this year and 7.4% next year.
Personal Taxation and Pensions:
More people will pay the top rate of income tax with the threshold for highest earners being brought down from £150,000 to £125,140.
The Chancellor announced a range of tax threshold freezes – meaning millions of people will pay more tax as their salaries rise.
Dividend allowances will be cut and the annual exempt allowance for capital gains tax will also be cut.
The state pension, benefits and tax credits will rise by 10.1 per cent – in line with inflation and the pensions triple lock will be kept in place.
Business
Energy companies will have to pay an expanded windfall tax of 35 per cent – up from 25 per cent – until March 2028.
From Spring 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty. The Chancellor said that up to half of vehicles are expected to be electric by this point and that this announcement would make the tax system “fairer”.
A £14 billion tax cut on business rates was announced which, he said, would benefit around 700,000 businesses.
The employment allowance will stay in place but at the higher rate of £5,000.
Cost of Living Support
Help with energy bills will be cut back, with typical bills rising from £2,500 a year to £3,000 from April. This new guarantee based on the average cost to a typical household will be kept for a further 12 months.
A one-off payment of £900 to households on means-tested benefits was announced; £300 to pensioner households and £150 for individuals on disability benefits.
The ‘national living wage’ will rise to £10.42 for over-23s an hour from April – an increase of 9.7 per cent.
Spending:
All Government Departments will be hit with a spending squeeze to help balance the books – apart from the health budget, which will be protected to help ensure a “strong NHS”. The Chancellor said there would be a £3.3 billion increase in NHS funding.
Education
The schools’ budget will be increased by £2.3 billion a year.
Employment
The OBR predicts unemployment is set to rise by 500,000, peaking at 1.7 million.
The Chancellor announced he will ask 600,000 more people on universal credit people to meet with work coaches to get additional support and increase their work hours and earnings.
