The autumn budget: discipline & responsibility
This afternoon the Chancellor announced his autumn budget and talked about the fact that public debt is almost at 100% of GDP. He said that the need to strengthen public finances is paramount and announced two fiscal rules that will ‘bind us’ to discipline and responsibility:
- Public sector net debt must be falling because of its sensitivity to debt interest
- The government will only borrow to invest - everyday spending will be paid for through taxation
Both rules must be met by the third year of every forecast period.
This article summarises the announcements made today, with a more detailed post budget document being emailed in PDF format tomorrow for you to download and review.
Summary of spending announcements:
- Increase in total departmental spending over this Parliament by £150bn. The largest increase this century, with spending growing 3.8% a year in real terms;
- Health capital budget will be the largest since 2010;
- A £500 million investment in expanded support for children and families, including £300m for local authorities to transform services in new local Family Hubs;
- Investment in schools, with an additional £4.7bn by 2024-25;
- Providing £560m for youth services over the next three years, enough to fund up to 300 youth clubs in England;
- Funding of £11m to support the 2030 men’s Football World Cup hosting bid, alongside £200m to build or transform up to 8,500 state of the art community football pitches;
- Funding to turn over 100 areas of derelict land into new ‘pocket parks’;
- Allocation of the first round of bids from the Levelling Up Fund (£1.7bn) to invest in the infrastructure of everyday life in over 100 local areas. With £150m in Scotland, £110m in Wales, and £50m in Northern Ireland;
- An investment of £850m to protect museums, galleries, libraries, and local culture including a review of museum freedoms and extension of the tax relief for museums and galleries;
- Tax reliefs for theatres, orchestras, museums and galleries from today will be doubled until April 2023 and won’t return to the normal rate until 2024;
- Increase in Scottish Government funding next year, by £4.6bn, Welsh Government funding by £2.5bn, and £1.6bn for the Northern Ireland Executive;
- An investment of £5.7 bn in transport settlements;
- ‘Making the UK a Science Superpower’ funding. An increase in core science funding by £1.1bn, fully funding Horizon Europe, increasing Innovate UK’s budget, and funding £800m for ARIA and £1.7bn for Net Zero R&D;
- A new Global Talent Network announced, to work with UK businesses and research institutes to identify and attract the best global talent in key science and tech sectors. The network will initially launch next year in the Bay Area, Boston and Bengaluru;
- Launch of ‘Multiply,’ a £560m, three year plan to improve basic maths skills and change people’s lives across the whole United Kingdom;
- The £1m Annual Investment Allowance will not end in December as planned, but will be extended to March 2023.
Steps to ease the burden on business rates and boost high streets:
- Announcement of measures to make the business rates system fairer and more timely with more frequent revaluations every three years. The new revaluation cycle will be delivered from 2023;
- A new relief to support green technologies. Until 2035, plant and machinery used onsite for renewable energy will be exempt from business rates altogether;
- ‘Business rates improvement relief’ - from 2023 every business will be able to make property improvements and for 12 months, pay no extra rates. Together with the new green relief these investment incentives total £750m;
- Next year’s planned increase in the multiplier will be cancelled.
- A new one year 50% business rates discount for retail, hospitality, & leisure sectors.
Alcohol duty system:
- Draught Relief will apply a new, lower rate of duty on draught beer and cider, aiming to benefit community pubs who do 75% of their trade on draught. It’s not a freeze, it will cut duty by 5%;
- The planned increase in duty on spirits like Scotch Whisky, wine, cider and beer, will be cancelled from midnight tonight.
- The planned rise in fuel duty will be cancelled.
National Living Wage rise:
- Increase in the National Living Wage next year by 6.6% to £9.50 an hour. For a full time worker, that’s represents just over £1,000 a year.
- The UC Taper Rate will be cut by 8p from 63p to 55p;
- An increase to Work Allowances of £500. Nearly 2 million families will keep on average, an extra £1,000 a year. It will be introduced no later than 1 December.
If you have any questions regarding the Chancellor’s announcements please do get in touch with your Swindells’ partner who will be able to advise you further.
We will be sending out a more detailed post budget PDF tomorrow.
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