General

Dorset's businesses react to the Chancellor's Autumn Statement

Jeremy Hunt, Credit: Simon Dawson

By Sam Pither [email protected]

Published: November 22, 2023 | Updated: 23rd November 2023

Yesterday marked the release of the Chancellor’s Autumn Statement.

Chancellor Jeremy Hunt announced that business investment tax relief has been made permanent and national insurance has been cut by 2 per cent.

The main rate of national insurance will be cut by two points to ten per cent from January 6 at a cost of £9bn while a scheme which gives companies tax relief on capital investments will be made permanent.

The capital expensing scheme, which was due to expire in 2026, allows a company to immediately deduct all of its spending on IT equipment, plant or machinery from taxable profits.

Chancellor Jeremy Hunt also announced plans to sell the government’s entire holding in NatWest by 2025-26 subject to market conditions.

Businesses in Dorset have been reacting to the announcements.

David Chismon, Partner in Saffery‘s Bournemouth office, said: “The immediate build-up to today was about what tax changes might be made.

“As we learned today, the rate of Inheritance Tax hasn’t been reduced, but there is a welcome reduction in the national insurances rates for individuals and the full expensing for businesses of their plant and machinery capital expenditure. The Government have also maintained the triple lock for pensioners with the state retirement pension being increased next April by 8.5%.

“The summary of today’s changes are that they will make the economy permanently bigger, keep borrowing and debt lower than in Spring this year and make inflation return to target in line with the Prime Minister’s economic priorities. It is unlikely that the UK will go into a recession in the coming year and inflation should reduce to 3%.

With an interesting year ahead, only time will tell if this is right!”

Kelly Greig, Partner and Head of Estate Planning and Tax at Bournemouth-based law firm, Steele Raymond, said:

“When Chancellor Jeremy Hunt took to the stand, he announced that he arrived with ‘good news’. Given the numerous leaks and earlier announcements – which have now become customary in the lead up to his delivery – it was believed that there would be few surprises, which turned out, in the main part to be true.

“Contrary to what we’d expected and dare-say hoped for, today’s announcements resulted in a ‘safe budget’.  The Chancellor had the opportunity to go further, and faster, but he did neither.

“Instead, he set out measures that will continue to support employees, self-employed, those looking to get into work and businesses seeking growth.

“We welcome his pledge to reduce the rate of employee’s National Insurance (NI) contributions to 10% and scrapping the class 2 NI contributions for self-employed, alongside reducing the class 4 NI contributions to 8%.  These measures will undoubtedly support individuals as they continue to grapple with the cost-of-living crisis.

“Likewise, increasing the national living wage to £11.44 per hour, extending Universal Credit and increasing the state pension by 8.5% all contributed to this budget being a ‘safe’ list of measures, in the run-up to an election year.

“There was also welcome news for businesses, as the Chancellor announced a permanent extension for the ‘full expensing’ tax break, allowing companies to deduct spending on new machinery and equipment directly from profits.   In a bid to continue to support businesses in retail, leisure and hospitality, the 75% business rates discount will be extended by a further year.

“Covid has proved to many employers that work can be delivered just as effectively from home, as it can in a workplace.  Recognising this, the Chancellor announced that he would reform the Work Capacity Assessment, to reflect this shift and mandate employers to offer working from home arrangements, as part of the assessment.

“In the pipeline, but still for consultation, is forcing new employers to pay employer pension contributions into existing pension pots, which will simplify the process and ease the administration burden on employees.

“Billed by the Chancellor as an Autumn Statement for growth, I feel that he’s tinkered with several measures, to appease voters, but has missed an opportunity to go much further to make significant improvements for individuals and businesses alike.”

Nigel Smith, managing partner of Ellis Jones Solicitors, said: “The Chancellor’s very welcome reforms of National Insurance have certainly grabbed the attention.

“Anything which reduces the burden of this ‘hidden tax’ is to be applauded, especially as the Chancellor has considered both the self-employed and employed.

“The introduction of changes on January 6 rather than in the new tax year in April will make an immediate impact on pay packets although some employers may need support or advice to help with implementation through their payroll.”

Coles Miller Solicitors Managing Partner Neil Andrews said the Chancellor had fired a welcome “salvo of pre-election tax cuts”.

Mr Andrews said: “The two per cent reduction in National Insurance will provide relief to millions from January.

“And the extension to full expensing for qualifying capital expenditure is very welcome – as are the abolition of Class 2 NI and the cut in Class 4 NI for the self-employed.”

He added: “The National Living Wage will increase to £11.44 per hour from April 2024 and this rate will be expanded to include employees aged 21.

“Sadly, the Chancellor has not addressed the lack of funding for public services such as the courts and the Land Registry. This under-resourcing causes delays which impact on people’s lives and livelihoods.”

Read next: Biz Roundtable: Dorset Braces for Near-Term Headwinds But Stays Resilient

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