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Chancellor Unveils Bold Tax Cuts and Growth Initiatives for Workers and Businesses in 2024Date Posted: 11 December, 2023
Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ outlines a comprehensive plan to bolster Britain’s economic recovery through strategic tax cuts and incentives targeted at both workers and businesses. This multifaceted approach aims to stimulate growth, enhance productivity, and foster a resilient economy.
One of the pivotal measures announced is the reduction of Employee National Insurance from 12% to 10%, slated to take effect from January 2024. This substantial cut is expected to inject newfound financial relief for approximately 27 million workers, translating to an average annual tax reduction exceeding £450. The move underscores the government’s commitment to rewarding hard work and swiftly improving living standards for a significant portion of the workforce.
Self-employed individuals are not left out of this fiscal overhaul. The Chancellor has proposed a noteworthy cut and reform in taxes for the self-employed. From April 2024, Class 4 National Insurance Contributions (NICs) for the self-employed will witness a reduction from 9% to 8%. Additionally, the flat-rate compulsory charge for Class 2 NICs, currently £3.45 for self-employed individuals earning over £12,570, will effectively be abolished from April 2024. This progressive step is anticipated to result in substantial savings, with an average self-employed person earning £28,200 a year benefitting by £350 in the fiscal year 2024/25.
Furthermore, the business landscape is poised for transformation, with the Chancellor unveiling what is touted as the largest permanent tax cut in modern British history for businesses. Under the banner of ‘Full Expensing: Invest for Less,’ companies investing in IT equipment, plant, and machinery will be eligible for 100% capital allowances on qualifying main rate investments. This groundbreaking measure represents an effective permanent tax cut amounting to £11 billion annually, with projections indicating a £14 billion boost in business investment over the forecast period. This substantial financial impetus is envisioned to significantly contribute to economic growth.
In tandem with these tax-centric initiatives, the government is steadfast in its commitment to ensuring work pays. The National Living Wage is set to undergo a nearly 10% increase, reaching £11.44 per hour from April 2024. This move, the largest ever cash increase in the National Living Wage, is expected to benefit over 2.7 million low-paid workers, constituting a considerable improvement in annual earnings for those on the wage.
Additionally, the Chancellor has underscored the importance of welfare reform, aligning with the government’s broader vision of expanding the workforce and facilitating the reintegration of individuals into employment. The announced measures are projected to support an additional 78,000 people in securing employment by 2028-29.
As Britain navigates the path to economic resurgence, these meticulously crafted fiscal policies seek to strike a balance between individual financial well-being and the health of the business ecosystem. The question that emerges now is: Which facet of the Autumn Statement do you believe will exert the most significant impact on Britain’s economic trajectory?