A balanced path to stability, growth and public services. During his autumn speech, these are the key areas that new Chancellor of the Exchequer, Jeremy Hunt, said are the Government’s priorities right now.
This was an Autumn Statement given in a climate where the Chancellor was preparing people for adjustments that would need to be made in order to get the YUK economy back on track.
People from all walks of life listened to the Autumn Statement to see what policies would be put in place to tackle the current economic issues facing the United Kingdom.
How is economic growth going to take place in the current climate and, as individuals, people want to know how what is laid down in the Budget Statement is going to affect their pockets.
The current cost of living crisis is affecting both individuals and businesses with wages not covering the cost of living for many workers around the country.
With food prices increasing by16% and average household bills increasing by a huge 25% since last year, people on lower incomes, in particular, are adversely affected and struggling to make ends meet.
And with energy bills set to rise by a fifth to £3000 a year from April 2023, many individuals, families, business owners and public services are looking at the Autumn Statement to see where any relief might come from.
As an employer, depending on the sector you are working in, your business and way of working will have been affected by the pandemic and by Brexit.
Some sectors such as the hospitality industry, for example, have been – and still are – particularly affected. Would the Chancellor’s Budget offer any respite for businesses like this.
If you are an employer at a smaller or medium sized company, you may also be feeling the effects of the current economic climate more adversely than larger companies.
Increases in energy costs and the rise in inflation, perhaps confounded further by the difficulties in finding staff to fill positions.
For your current team of staff, paying them a salary that affords them a certain standard of living and covering the costs of running the business at the same time is proving increasingly challenging – and, of course, impossible – for numerous business owners around the country.
Key Announcements From Chancellor Jeremy Hunt’s Autumn Budget
Whatever your situation, this article will take a look at some of the key takeaways from Chancellor Jeremy Hunt’s Autumn Statement and how you might be affected as an employer.
With some commentators predicting a brutal budget to be announced, whilst the budget acknowledges tough times ahead in order for stability and economy growth to resume, some have said the Autumn Statement was not as brutal as it could have been.
There was good news and bad news and, depending on which media you read, a different spin was taken on each announcement.
A National Living Wage Increase
One of the biggest stories to come out of the Budget was the announcement that the National Living Wage for those over 23 years of age would be increased by 9.7% from April 2023.
The National Living Wage is currently £9.50 per hour and the increase means people earning the wage will now earn £10.42 per hour. An annual pay rise of £1,600 for those who are working full time.
This is the largest ever increase to the National Living Wage and it was stated that the increase will benefit more than 2 million of the country’s lowest paid workers.
Whilst this has been applauded as good news, critics have also pointed out that with inflation being over 11%, this increase in wage will not allow workers on this rate to cover the increases in the cost of living.
A further criticism is that self-employed people have been forgotten. If you are a small business owner with employees, you may fall into this category because you are self-employed.
This increase in the National Living Wage will have to be covered by you as an employer – and you are already operating in difficult financial conditions.
Critics say this additional cost could force a lot of smaller companies to reconsider their workforce. If you are in this situation, maybe you are feeling compelled to look at your workforce and consider how many you can afford to employ.
In a worst case scenario, some smaller businesses may be forced to cease to operate.
The Chancellor did say, however, that the Autumn Budget will cause inflation rates to fall sharply from the middle of next year so this could offer some respite for you as an employer.
A Fall In The Income Tax Threshold
It was announced that higher earners would be required to help the Government fill the gap in the Government finances and this will be done by a fall in the 45p tax threshold.
The 45p tax threshold will fall from £150,000 to £125,400.
This means around 250,000 taxpayers will be brought into that threshold and it could cost cost those people an extra £580 a year.
For a person earning £150,000, that cost will be an extra £1243 per year.
A Freeze In Thresholds For Income Tax And National Insurance
It was announced that Income Tax and National Insurance thresholds will be frozen until 2028.
This means that people will pay a bigger share of tax when they get a pay rise. Critics say that as wages rise with inflation, people will pay a higher proportion of their income in tax so they won’t feel the benefit of higher wages.
Some Protection For Social Housing Tenants
If you are an employer in the social housing sector, this Budget announcement may affect you in some way.
Social housing tenants have received a degree of protection from rising rents which usually increase with inflation.
The Chancellor announced a 7% cap on rent increases and it is hoped this will help tenants to afford their rents and not fall into rent arrears.
Again, critics have said this cap does not go far enough. If you are involved the Housing Association sector, you may be aware of government consultations. Rent caps where suggested for 3%, 5% and 7%.
Critics say the 3% cap should have been chosen to further help tenants who are already struggling.
Increases Or Cuts In Funding For Public Spending?
Depending on your publication of choice, there were either cuts or increases announced for public spending.
The Chancellor announced an increase in funding for the social care sector. £2.8 billion next year and then £4.7 billion for the following year.
However, analysts point out that this and other public spending will grow at a slower rate than economic growth. The Chancellor acknowledged that there would be spending squeezes on government departments and adjustments would have to be made by these departments.
Critics say this means local councils and public services cannot deliver the support needed to vulnerable people around the country.
If you work in the public sector, you will no doubt be aware of the adjustments that will need to be made in your department and how this will affect those you are working to help.
The Chancellor announced that pensions will rise in line with whichever is the highest: Average earnings, inflation or 2.5%.
Electric Vehicle Taxes
Previously exempt from tax, the Chancellor announced that there would be tax on electric vehicles from 2025. If you are an employer that uses electric vehicles in your company, this will obviously affect you.
If you offer company cars to your employees and these are electric vehicles, the tax on these vehicles will be lower.
A Cut In Stamp Duty
If you are an employer in the construction industry, you may see some benefits as a result of the Stamp Duty cuts which will remain in place until March 2025. Whilst some would like to see these cuts remain in place for longer, the Chancellor said the cuts will support the housşng market and the job associated with this.
For first time buyers, Stamp Duty has been cut from £300,000 to £425,000. For others, the duty is cut from £125,000 to £250,000.
Capital Gains Tax
If you own a business that sells business assets or very expensive goods, you will be required to start paying Capital Gains Tax on these sales.
When this comes into place, the threshold is coming down.
Shareholders of companies will also be required to pay Capital Gains Tax on any dividends that are paid out to them.
£14 Billion Tax Cut – Support For Small Businesses
If you are an employer with a small business and premises, you may benefit from the £14 billion tax cut that will take place over the next five years.
Chancellor, Jeremy Hunt said, “Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit.”
Around 700,000 businesses will benefit from a new government funded Transitional Relief Scheme where there will be targeted support for small businesses and the high street.
900,000 small properties will not see an increase of more than 5% because these businesses are the ınes that are most likely to be struggling to cover large bill increases.
Also there will be more support for businesses with large premises with a year 1 cap of 30%. This is more support than previous years.
With regards to small companies, critics say small firms are seeing greater costs across the board from rises in rents to larger than expected pay raises and employers have been offered no respite after surviving the pandemic.
Employers in small businesses are being expected to find more money from somewhere to cover inflation costs.
If you are an employer affected by this, you can read more about the consultation on the transitional arrangements – the summary of responses and the government response at gov.uk.
A Freeze On The VAT Threshold
Again, small businesses were hoping for more good news with regards to the VAT threshold. That good news didn’t materialise.
The freeze on the VAT threshold means the point at which businesses start paying VAT will remain the same for the next two years.
This is frustrating for employers in small businesses because it means as company incomes increase due to inflation, they will need to start paying VAT sooner than previously.
As a small business owner, you will need to find ways to cover these costs. For many business owners, they say they will have no choice but to pass on these costs to customers by way of charging higher prices for goods and services.
Into 2023 & Beyond…
So, an Autumn budget that looks to the future stability and growth of the UK economy. For young people entering the workplace, some employers would like to see more investment in workforce skills and training. They say this is what will also set the UK up for future growth.
Apprenticeships and T Levels need attention and investment so that young people are gaining the skills and knowledge necessary not just to be able to do their jobs and gain qualifications but to also be the future of the UK – driving the economy forward.