Chancellor Jeremy Hunt Announces Tax Cuts to Boost UK Economy
British Chancellor of the Exchequer Jeremy Hunt has revealed a series of tax cuts aimed at stimulating economic growth in the UK. The package, announced during his Autumn Statement 2023, includes reductions in National Insurance rates for workers and simplified tax measures for self-employed individuals.
Hunt emphasized the government’s commitment to reducing debt, cutting taxes, and rewarding hard work. As part of this plan, the main rate of National Insurance will be reduced from 12 percent to 10 percent, effective from January 2024. This change will benefit approximately 27 million workers across the country. Additionally, taxes for two million self-employed individuals will be cut and simplified, providing further support for this sector of the economy.
The combined value of these tax cuts is estimated to be over £9 billion per year, making it the largest ever reduction for employees and the self-employed. The independent Office for Budget Responsibility (OBR) predicts that the cuts will result in an additional 28,000 people entering the workforce.
In response to concerns about the impact on public services, the Treasury assured the public that the reduction in National Insurance rates will not affect funding for the National Health Service or pension payments. Services will continue to be funded as they are currently.
The National Living Wage, also known as the legal minimum wage, will also see an increase of nearly 10 percent from £10.42 to £11.44 per hour, starting in April 2024. This wage hike aims to further reward workers and improve their standard of living.
The Chancellor also unveiled a new permanent tax cut for businesses in the UK called “Full Expensing: Invest for Less.” It allows companies to offset their investment in information technology equipment, plants, and machinery against tax. According to Hunt, this measure will enable companies to deduct £250,000 from their tax bill for every £1 million they invest. With a cost of £11 billion annually, this is being hailed as the largest business tax cut in modern British history.
The Autumn Statement also included positive news for pensioners and those receiving Universal Credit and other working age benefits. State pensions will increase by 8.5 percent in April 2024, while Universal Credit and other benefits will receive a boost of 6.7 percent in line with September’s inflation figure.
The Office for Budget Responsibility (OBR) predicts that the UK economy will grow by 0.6 percent this year and 0.7 percent in the following year, before reaching 1.4 percent in 2025. The OBR also forecasts a decrease in headline inflation to 2.8 percent by the end of 2024, meeting the Bank of England’s target of 2 percent for 2025.
These tax cuts and economic forecasts come at a time when the UK economy is recovering from the impact of the COVID-19 pandemic. Chancellor Jeremy Hunt hopes that these measures will provide the necessary boost to stimulate growth and support businesses and workers across the country.
More detail via The Star here… ( Image via The Star )