The UK chancellor, Jeremy Hunt, will deliver his Autumn Statement to Parliament on Wednesday 22 November. With the state of the economy still feeling somewhat uncertain, much of his statement is likely to surround a progress update on how the Government is delivering on its key targets, namely halving inflation, growing the economy, and reducing national debt.
Yet with a General Election looking likely to take place at some stage in 2024, Jeremy Hunt will be keen to use the Statement to tease elements of the Conservatives’ proposed election platform, at the very least.
UK businesses have been calling out for measures that provide stability and that encourage and enable long-term planning and investment. In the current economic climate, businesses and employees alike need certainty and reassurance above all from this Autumn Statement. Menzies’ accountancy and strategic advisory experts have outlined their top predictions of what we might expect later this month.
Tax
The Chancellor has already stated that tax cuts are highly improbable in the upcoming Autumn Statement, citing the UK’s ongoing economic instability marked by the cost-of-living crisis as well as elevated inflation and interest rates.
Regarding business rates, Hunt is likely to keep the freeze on the business rates multiplier in England to prevent inflation driving an increase linked to inflation, as well as to continue the extension to 75% business rates relief for the retail, hospitality and leisure sectors.
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By GlobalDataAnti-avoidance
Given that Jeremy Hunt will likely want to present the Conservative Party as serious about eradicating abuse of the tax system, anti-avoidance measures and greater scrutiny of evasion are likely to be a focus of his Statement.
A target area could be the expansion of the 2021 IR35 changes – these ‘off payroll’ reforms were designed to stop contractors working as ‘disguised employees’, by taxing them at a rate similar to employment. The legislation puts the burden of responsibility on the entity that pays the contractor, and is currently applicable to all private sector business, with the exception of small companies. Hunt may look to expand this to additionally cover small businesses.
He may also look to announce changes to HMRC’s POTAS (promoters of tax avoidance scheme). A possible form of change could be the removal of some safeguards, such as the requirement to get the Tribunal’s approval before issuing a monitoring notice.
Incentivising investment
Productivity has remained fairly stagnant in the UK for several years, with output per hour having barely grown since the 2008 financial crisis. A key driver of this stagnation in productivity is that the economy suffers from chronic underinvestment in the private sector – tax relief and incentivisation remain crucial in opening up avenues for businesses to invest and should continue to be expanded upon.
Ideally, Jeremy Hunt will no doubt want to announce he is making the capital allowances full expensing regime that offers a 100% first-year deduction permanent. This would in some part meet Rishi Sunak’s statement of offering the British public ‘long-term decisions’.
The British Business Bank has been the topic of much conversation of late, and it’s predicted that the Chancellor may announce the launch of a new fund by the Bank that would allow pension funds to invest securely in smaller high-growth businesses.
Sustainability
The Conservative Party will be under significant pressure from factions within the Party as well as the wider public to demonstrate it is still taking its Net Zero pledges seriously, given the delay to the petrol car ban announced in September. Given this, there is scope to extend the exemption from 10% import duty for electric car batteries which is currently due to expire on 31 December 2023. Extending the exemption would likely result in more affordable vehicles for the end consumer, as well as providing a boost to the burgeoning EV industry.
