Autumn Budget

Jeremy Hunt’s Autumn Budget Statement: A Summary

That’s right, another budget! And we can’t even say it’s winter yet so we still have to call it the Autumn budget. But this time, it’s Jeremy Hunt who delivered it.

With the war in Ukraine, the cost of living crisis, and the ongoing fallout from the pandemic, it was never going to be a budget full of good news. But Jeremy Hunt did promise “balanced budget for stability, growth, and public services.

Let’s take a look at the main points of the budget.

  • Mr Hunt confirmed the United Kingdom is in recession
  • 45p tax rate threshold to be cut from £150,000 to £124,140
  • Tax thresholds currently frozen until 2026 will now be frozen until 2028
  • Government support amidst the energy crisis will continue, but will reduce from April 2023
  • NHS budget will be increased in each of the next two years by £3.3bn
  • Other Government departments must see a cut in spending
  • State pension, tax credits and benefits will rise in line with inflation
  • National Living Wage will increase to £10.42 an hour for those over-23 from April

If you want a more comprehensive breakdown of today’s budget, keep reading.

Income Tax

Income tax thresholds were frozen until 2026 – Jeremy Hunt Announced that today this would be extended until April 2028. The same goes for NI and inheritance tax thresholds. While this may sound like good news, the fact is that millions of people will end up paying more tax when their incomes rise. 

The National Living Wage, currently £9.50, will be increased to £10.42 for over 23s from April 2023.

Current tax-free allowances for dividend and capital gains tax will be cut next year and the year after.

U.K. Economy

Because the economy has been slowing for the last two quarters, the Office for Budget Responsibility (OBR) has judged the UK to be in recession. While the OBR has predicted growth for this year overall, it has also predicted that the economy will shrink next year.

Inflation peaked at over 11% last week, but forecasts state that next year it should be slightly lower at 7.4%.

Energy Crisis

The Government’s announcement that its support through the energy crisis is welcome, as is the news that there will also be targeted support for pensioners, people on low incomes, and people with disabilities.

Business Tax

Windfall tax is a tax on unexpected profits – oil and gas firms who experience these profits will be taxed 35% instead of 25%, and this temporary tax is extended to April 2028. In addition, companies that generate electricity will face a new temporary 45% tax from January. 

Employment Allowance “allows eligible employers to reduce their annual National Insurance liability by up to £5,000” – this allowance will remain at £5,000.

Other Notable Announcements From the Autumn Budget

We’ll keep this article short and readable for you, but there are a few other announcements worth mentioning.

Education and healthcare are set apart as somewhat untouchable by the Government, with both receiving not just protection from cuts, but investment over the next couple of years. 

The Chancellor also spent some time talking about innovation, and vowed to protect the Government’s research and development fund. He wants the U.K. to be the “next Silicon Valley”, the hub of innovation and technology.

Tough Times Ahead But There’s Light at the End of the Tunnel

With this Autumn budget, the Conservative Government is doing its best to undo the catastrophic consequences of the past few months’ decisions, but with the cost of living crisis and energy crisis paired with inflation rates and high unemployment, it’s hard to see any silver lining on the clouds.

That being said, this budget does seem a little more balanced than the previous attempt by Kwasi Kwarteng.

Jeremy Hunt was once an entrepreneur, so he understands business and the need to protect innovation and encourage growth. That’s good news for business owners – if you want any advice on how to navigate through this season, get in touch with us today!

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