We were expecting large scale changes to the heavy Inheritance Tax charges of 40%, perhaps a pension overhaul or increases in ISA allowance but what happened wasn’t that exciting!

In stark contrast to Liz Truss’s shambolic Autumn statement in 2022, which caused widespread economic turmoil, today’s Statement took place against a much more stable economic backdrop, a point Jeremy Hunt was eager to underline during his speech. Citing the fall of inflation down to 4.6%, and better than expected GDP growth in 2023, the Chancellor confidently declared that this was a statement for a ‘country that had turned a corner’.

Higher tax revenue boosted government funds and the Chancellor has used this windfall to deliver a growth agenda. This budget has been designed to boost economic activity with the bulk of measures focused on businesses – comprising over 100 supply-side reforms. Savers and investors didn’t miss out either, with a series of pre-elections giveaways thrown in to help boost the Government’s appeal ahead of next year’s poll.

Business reforms

Prior to today, Mr. Hunt said that he would “remove the barriers that stop businesses growing” and true to his word he delivered one of the most substantial tax cuts for business in recent times, making the “full expensing capital allowance scheme” permanent. This £11bn billion-a-year tax break will allow firms to deduct the full cost of investments in equipment from their profits. While this has a big upfront cost, the Chancellor will hope that this creates a platform for UK increased business investment to boost economic growth and increase productivity, which has been stagnant since 2008.

Pensions shake-up

This has affected very few of the clients at Imperial, however in a “major pension shake up”, the Government has introduced “Auto Enrolment 2.0,” which empowers savers to establish a lifelong “pension pot” that they can direct current and future employers to contribute to. While this move could grant savers greater control over their retirement savings, the extent of government assistance in guiding savers towards the most suitable pension provider remains uncertain.

Despite heavy rumours to the contrary, there was good news for pensioners as the ‘triple lock’ pledge was honoured, lifting the state pension by 8.5% from next year.

National Insurance reductions

Despite his promise not to make any tax cuts that could lead to inflation, in a surprise move, Hunt reduced National Insurance for 27 million people. However, its impact on inflation will likely be negligible given the 2022 freezing of tax rate thresholds, which pushed many earners into higher tax brackets.

ISA revamp

Investors and savers will welcome a wide-ranging package of ISA reforms that simplify the system and encourage take up amongst younger people. The revamped regime includes the ability of individuals to contribute to multiple ISAs in the tax year without impacting their £20,000 allowance and will enable people to hold fractional shares within the tax wrapper and this will start from April 2024.

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