The politician in Chancellor Jeremy Hunt must have wanted to go further in his Autumn Statement giveaways, but that was never likely to happen.
The Chancellor has put too much effort into reassuring the markets and the British public that he is a careful custodian of the economy to jeopardise all of that for a few quick wins.
That’s why measures such as cuts to income tax or inheritance tax were parked for another day.
Instead, yesterday’s Autumn Statement was dominated by two major announcements, firstly the reduction in the main rate of National Insurance from 12% to 10% from January 6, affecting over 27 million people.
Class 2 NI, paid by the self-employed earning more than £12,570 will be abolished from next April, while Class 4 NI for self-employed paid on profits between £12,570 and £50,270 will be cut from 9% to 8% from April.
The other significant announcement was the decision to make the so called “full expensing” tax break – allowing companies to deduct spending on new machinery and equipment from profits – permanent.
The first announcement regarding the NI breaks is intended to give a large proportion of the British electorate an almost instant saving, whereas the tax break for businesses should give a medium to long term boost to the UK economy.
Other announcements of note included state pension payments increasing by 8.5% from April in line with average earnings and a much-deserved boost to the minimum wage – officially known as the National Living Wage – which will rise from £10.42 to £11.44 an hour from April. The new rate will also apply to 21 and 22-year-old workers for the first time, rather than just those 23 and over.
Given the need to balance the requirement to engineer growth but without damaging the downward trajectory of inflation, the Chancellor had limited room for manoeuvre.
There was also a real sense from both the Chancellor’s statement and the response from the Labour opposition that we are at the start of an election year, with both sides setting out their likely positions for the battle ahead, namely the Conservatives wanting to be seen as the party of economic responsibility and Labour as the party that can bring change after 13 years of Conservative government.
Chancellor Hunt will have one more roll of the dice – the main Budget in the spring – to go further than he was able yesterday with the need to do something about the fiscal drag, when tax thresholds do not keep up with the rising cost of living, pulling more people into higher tax brackets, likely to be high on the agenda.
Our 25th Anniversary
We were delighted to celebrate our 25th anniversary with a small party at The Neston Club earlier this month. It was lovely to mark this occasion with some of our longer standing clients as well as staff and other friends of the business. We even made the local news!
Thank you to everyone who has helped us to reach this milestone and we look forward to continuing to provide all clients with the same high level of service over many more years.