Chancellor delivers tax cuts with Full Expensing made permanent

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22 Nov 2023

Chancellor Jeremy Hunt used his Autumn Statement to make tax cuts for businesses, workers and the self-employed.

The Chancellor said he was aiming to stimulate economic growth and highlighted 110 measures for businesses.

Mr Hunt made Full Expensing permanent for those businesses investing in IT equipment, plant and machinery.

Full Expensing was first announced in the March Budget and was scheduled to last for three years. It allows businesses to claim back up to 25p in corporation tax for every £1 they invest.

Mr Hunt has now made it permanent and said it represents the 'largest business tax cut in modern British history', worth £11 billion per annum.

The Chancellor also extended the tax reliefs and incentives for freeports and the Investment Zones programme from five to ten years. In addition, he announced three advanced manufacturing Investment Zones, which will be established in Greater Manchester, the East Midlands and the West Midlands. 

There was a business rates support package worth £4.3 billion over the next five years to help high streets and protect small businesses. This includes a rollover of the 75% retail, hospitality and leisure relief.

The Chancellor cut the main rate of employee national insurance contributions (NICs) by two percentage points from 12% to 10%, effective from January 2024.

Mr Hunt also cut and reformed NICs for the self-employed. He abolished Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570. In addition, from April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8%.

From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 an hour for eligible workers. The minimum age for the NLW was also lowered to 21 from 23. The government says this will mean an increase of over £1,800 to the annual earnings of a full-time employee on the NLW and is expected to benefit over 2.7 million low paid workers.

The pensions triple lock was maintained and pensioners will now get an 8.55% rise from next April, while benefits are set to increase in line with September's inflation figure of 6.7%.

The government is also reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system.

Mr Hunt delivered the Autumn Statement to the House of Commons against a mixed economic backdrop. The Office for Budget Responsibility (OBR) revised down its growth forecasts for 2024, 2025 and 2026 – even as it offered an improved outlook for this year and for 2027.

The Chancellor said: 'If we want people to get up early in the morning, if we want them to work nights, if we want an economy where people go the extra mile and work hard, then we need to recognise that their hard work benefits us all.

'Our choice is not big-government high spending, high tax because we know that leads to less growth, not more. Instead, we reduce debt, cut taxes and reward work.'

'Our plan for the British economy is working, but the work is not done.'