Chancellor announces tax cuts for millions in autumn statement

The average worker will save about £450 a year after Jeremy Hunt cut National Insurance by 2% while pensions and benfits payments will rise.

Key Points
  • Chancellor Jeremy Hunt has delivered the UK Government’s spending and tax plans
  • National Insurance will be cut by 2%, from 12% to 10%, from January 6
  • The UK Government will honour its commitment to the pension triple lock with an 8.5% rise
  • Benefits will increase by 6.7% next year in line with September’s inflation figures
  • Alcohol duty, including whisky, will be frozen until August next year
  • Minimum wage to increase by 9.8% to £11.44 an hour
  • Office for Budget Responsibility downgrades economic growth forecast to 0.6% – down from 1.8%
  • The UK will meet its NATO commitment to spend 2% of GDP on defence
  • ‘Full expensing’ tax break for businesses to be made permanent

Tax will be cut for millions of workers across the UK, the chancellor has announced.

Jeremy Hunt confirmed that National Insurance will be slashed by 2% during his autumn statement on Wednesday.

The cut will save the average UK employee on a salary of £35,000 about £450 a year, the chancellor said, at a cost of around £10bn to the Treasury.

The new rate will take effect from January 6 and will affect around 27 million people.

National Insurance is currently charged at 12% on earnings between £12,571 and £50,271 with 2% on anything over that.

This means that those earning more will benefit from higher savings than those on lower wages.

He also cut national insurance by an average £350 a year for around two million self-employed people from April.

But it comes after Hunt has frozen thresholds for income tax, meaning that “fiscal drag” has meant that as people’s earnings have increased they have either been brought into tax for the first time or moved into higher bands.

Unlike Income Tax, which is partially devolved to the Scottish Parliament, National Insurance applies across the UK.

Taxes remain at historically high levels.

Hunt also announced measures on benefits, pensions and business rates.

The chancellor confirmed his commitment to the UK’s pension triple lock with pensions set to rise by 8.5% from April 2024. That’s worth up to £900 a year.

Benefits will also rise by 6.7% – the inflation rate of September.

There was concern among anti-poverty charities that Hunt would use the lower inflation figure for October at 4.6%.

But he confirmed plans for a tougher welfare regime, saying it was “wrong economically and wrong morally” that every year more than 100,000 people were signed onto benefits with no requirement to look for work because of sickness or disability.

The Chancellor said: “We will reform the fit note process so that treatment rather than time off work becomes the default.

“We will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic. And we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs.”

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Zahada Safdar is worried about the chancellor’s push to get those with health conditions back into work. #stv #stvnews #news #politics #benefits #backtowork #ukpolitics #politics

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Zahada Safdar
Zahada Safdar is worried about the chancellor’s push to get those with health conditions back into work.

Zahada Safdar is among the thousands of Scots on benefits due to health reasons.

The 52-year-old has been dealing with chronic pain for years and she said the chancellor’s statement has worried her.

“This affects me 24/7,” she told STV News. “And I don’t see any way to fix the situation I’m in.

“I’m on a lot of medication but nothing is curing me. It’s a lifelong condition.”

She accused the UK Government of failing to understand the plight of many people in the UK with health conditions and disabilities.

She said: “We have a Conservative government in power that has zero care and compassion and a failure to understand that people are ill, people that have disabilities, we are not acting this out.

“This is our lives. I would love to go back to work.

“But with the condition I have, I wake up in the morning and the first thing I am in chronic pain.”

Asked if she would be able to do a mandatory work placement, she said: “I wouldn’t to be honest. It’s frightened me.”

First Minister Humza Yousaf said the Scottish Government hadn’t had what it wanted from the Autumn Statement.

Watch
First Minister Humza Yousaf reacts to Autumn Statement

“I’m afraid we’ve not, in the midst of a cost of living crisis, seen that essential guarantee, that not just the Scottish Government was asking for, but I know a number of third sector organisations were asking for<” he said.

“We’ve not seen what we’ve asked for in terms of capital investment for vital infrastructure and we’ve certainly not seen funding required in order to address fair pay, which I think is hugely important.

“So I’ll pour over the detail of course after these interviews, but it’s clear to me particularly we look at the economic growth forecasts going down that we have a UK government, a Conservative party that simply trashed and tanked the UK economy and Scotland’s suffering as a result of it.”

There was relief from the drinks industry on Wednesday afternoon after the chancellor announced that duty on alcohol, including whisky, will be frozen until August next year.

It comes as the Office for Budget Responsibility significantly downgrades its growth forecast for the UK’s economy.

Markets.
The growth forecast for the UK economy has been downgraded.

The OBR has forecast that the economy will grow by 0.6% this year and 0.7% in 2024.

Promising a budget for growth, the chancellor announced what he described as the “biggest business tax cut in modern history”.

He confirmed “that “full expensing”, a tax break allowing firms to cut their tax bills if they invest in new equipment, will be made permanent.

He said his plan will “raise business investment, get more people into work, reduce inflation” and increase the size of the economy.

The standard multiplier for rates on high-value properties will also increase in line with inflation, while the small business multiplier will freeze for a further year.

Andt the 75% rates discount for retail, hospitality and leisure will all be extended for another year.

‘Too little too late’

The SNP criticised the mini-budget as being “too little too late for the squeezed majority of households”.

SNP economy spokesperson MP Drew Hendry said: “With UK energy bills, mortgages, rents and food prices soaring, the very limited measures in the chancellor’s statement won’t touch the sides for most households who have seen their monthly costs go through the roof – and will still be hundreds of pounds worse off.

“This is yet another con trick from a Tory government that trashed the UK economy, failed to match the SNP government’s council tax freeze and Scottish Child Payment – and has refused to devolve powers to the Scottish Parliament so the SNP can act where they won’t.

“The UK economy is trapped in a vicious cycle of poor growth, stagnant wages and rising poverty as a result of Brexit and Tory cuts – but neither Rishi Sunak nor Keir Starmer will change course from the damaging Westminster policies that got the UK into this mess.”

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