27 November 2023

Key Takeaways: Chancellor's Autumn Statement

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Chancellor Jeremy Hunt's recent Autumn Statement outlined tax reductions, permanent business incentives, and a £500 million investment in AI. Economic challenge...
UK Tax
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Chancellor Jeremy Hunt's recent Autumn Statement outlined tax reductions, permanent business incentives, and a £500 million investment in AI. Economic challenges were acknowledged, but the notable omission of inheritance tax raised concerns among experts. This overview breaks down the key points, giving a glimpse into the UK's economic direction.

1. Tax reductions for employees and the self-employed:

  • Employees' contribution rate reduced from 12% to 10%.
  • Self-employed see cuts with the abolition of class 2 contributions and a 1% reduction in class 4 contributions, down to 8% from 9%.

2. Permanent "full expensing" for businesses:

  • Businesses granted a 100% first-year allowance for qualifying plant and machinery assets.

3. £500 million funding for AI innovation:

  • £500 million allocated to establish the UK as an AI powerhouse, supporting innovation centers.

4. Economic outlook and forecasts:

  • OBR predicts a decrease in headline inflation from 4.6% to 2.8% by end-2024, reaching the government's 2% target in 2025.
  • Economic growth forecasts reduced to 0.7% in 2024 and 1.4% in 2025, down from earlier projections.

5. Inheritance Tax (IHT)

  • IHT nil rate band freeze until April 2028; concerns raised about its long-term impact.
  • Inheritance tax described as the "elephant in the room" and likened to a "polar bear" due to prolonged nil rate band freeze.
  • Expert advises regular checks on IHT status and planning to minimise liability.
  • Individuals can pass on up to £325,000 tax-free; additional £175,000 for the main home passing to a direct descendant.
  • Strategies to reduce IHT include making gifts, utilising trusts, and understanding exemptions and allowances.
  • Specialist advice recommended for trusts and gifts, highlighting the importance of record-keeping and financial planning.

The Autumn Statement focused on tax reductions, business incentives, and AI innovation funding. However, concerns persist about the unaddressed issue of inheritance tax, prompting experts to highlight the need for proactive planning to navigate complexities and minimise liabilities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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