In the recent Autumn Statement for 2023, UK Chancellor Jeremy Hunt unveiled an ambitious tax cut package aimed at invigorating economic growth. Hunt emphasized a departure from high taxation and increased government spending, favoring a strategy centered on reducing debt, slashing taxes, and incentivizing work.
The focal point of this initiative is a reduction in the main rate of National Insurance from 12% to 10% starting January 2024, impacting approximately 27 million British workers. Additionally, tax cuts and simplifications are on the horizon for around two million self-employed individuals, amounting to a substantial annual tax cut package exceeding £9 billion ($11.2 billion).
These cuts represent the largest-ever reductions for employees and the self-employed, as projected by the Office for Budget Responsibility (OBR), aiming to prompt an estimated 28,000 people to enter the workforce, as highlighted in a statement from the Treasury.
The Chancellor assured that these alterations to National Insurance contributions would not affect National Health Service funding or pension disbursements, guaranteeing that services would continue as usual.
In April 2024, the National Living Wage will see a remarkable increase of nearly 10%, rising from £10.42 to £11.44 per hour, benefiting workers across the nation. Additionally, a new permanent tax cut named "Full Expensing: Invest for Less" was introduced for businesses, enabling them to offset their investments in technology and machinery against taxes.
Hunt highlighted the magnitude of this move, costing £11 billion annually, labeling it as "the largest business tax cut in modern British history."
The Autumn Statement also outlined plans for an 8.5% increase in the state pension and a 6.7% boost to Universal Credit and other working-age benefits in April 2024, aligning with September's inflation figures.
Economic projections from the OBR indicate a growth forecast of 0.6% in 2023, followed by 0.7% in 2024, with a surge to 1.4% in 2025. Furthermore, headline inflation is anticipated to decline to 2.8% by the close of 2024, ultimately reaching the Bank of England's 2% target for 2025.
(With Agency Inputs)
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