Yesterday’s Budget from the Chancellor revolved around making long-term decisions to promote growth, reduce debt, and support measures for the UK’s economic expansion. For a more detailed overview please click here for BDO’s analysis.
There will also be an Autumn Finance Bill 2023, which will be released soon, to implement various announced measures.
Economy & Growth
- The chancellor will invest an extra £4.5bn between 2025 and 2030 in manufacturing.
- About 1m will go to Aerospace companies & businesses working on green technologies.
- There will be new investment zones in Greater Manchester, and the west & east Midlands in addition, Wrexham in Wales.
- The chancellor is also exploring options for sale of some of the government’s state in NatWest, this will be done through a “retail share offer.”
- Freeports and investment zones will be given 10 years of financial incentives, rather than 5 currently planned.
- The Government will provide one simplified Research & Development (R&D) tax credit regime.
- The chancellor says forecasts show the economy will grow by 0.6% this year and 0.7% in 2024.
Wages & Benefits
- Employee National Insurance cut from 12% to 10% from 6th January 2024, saving an individual on the average salary £450.
- National Living Wage increase by 9.8% to £11.44/hr from 6th April 2024. This will also be extended from the age of 21.
- Full state pension will increase by 8.5% which equates to an extra £900 a year.
- Work continues to establish a pension pot for life scheme giving workers the option to nominate the fund their employer pays into. There is nothing specific on this yet.
- Benefits will be increased by 6.7%, with tougher requirements for those who claim them to look for work.
Business Tax
- Class 2 NI abolished for the self-employed and Class 4 reduced from 9% to 8% from April 2024.
- There will be business rates discount for hospitality, retail and leisure worth £4.3bn.
Inflation
- Inflation is expected to fall to 2.8% by the end of 2024. Last week inflation was at 4.6%.
- It is predicted inflation will fall to 2% by mid-2025.
- Higher inflation will keep interest rates elevated with the Bank of England rate remaining around 4% until 2028.
Other information
- All alcohol duty will be frozen until August 2024.
- Local authorities will be able to recover the costs of major business planning applications if they meet guaranteed fast timelines. This should cut the time it takes for planning applications.
