UK Autumn Statement: adjustments to personal tax and welfare policies

Posted 23/11/2023 by Arianna Adamo


Chancellor Jeremy Hunt has announced a substantial cut to the main 12 percent rate of employee national insurance contributions, reducing it by two percentage points to 10 percent. This tax reduction, effective from January 6, 2024, is expected to benefit a staggering 28 million people, with individuals on the average salary poised to save £450 annually.


Neil Carberry, REC Chief Executive, commended the steps taken to reduce employees’ National Insurance, extending the Restart program, and reforming fit notes, but cautioned about the downgraded growth forecasts.


He said: “Reducing employees’ NI is a great way to make work pay – and we also welcome the extension of the Restart programme and reform of fit notes as these steps will help ensure that we make the most of the UK’s labor force. Extending Restart was a key REC aim – it is a programme that effectively harnesses joint working between public and private sectors to get people into work.”





Hunt’s ambitious welfare reforms aim to bring 200,000 more people into the workforce. Notably, individuals claiming benefits will now face mandatory work experience if they are unable to secure employment within 18 months.


As part of the pre-announced measures, the “national living wage” will see a substantial increase of more than a pound per hour, reaching £11.44 from April. This wage hike will also extend to 21-year-olds. Additionally, benefits will experience a notable uptick of 6.7 percent, accompanied by more stringent requirements for claimants to actively seek employment.


The state pension is set to receive an 8.5 percent increase, addressing concerns about financial well-being in retirement. Furthermore, the long-frozen local housing allowance will see a noteworthy boost, injecting £800 into some households next year.





Hunt also declared a £50 million pilot initiative aimed at “boosting” apprenticeship training in engineering and other sectors experiencing growth.

During the announcement in the House of Commons, Hunt stated, “We aim to increase the number of apprenticeships. Building on discussions with Make UK and other stakeholders, I am allocating an additional £50 million in funding over the next two years to experiment with methods to augment the apprenticeship count in engineering and other critical growth sectors facing shortages.”





The government is also to reform work capability assessments so more individuals receive the right support to find work where they can. This plan has been designed to assist individuals with disabilities, those with long-term health conditions, or those facing “long-term unemployment” in finding and retaining employment. The plan aims to support nearly 60,000 individuals with long-term illnesses or disabilities in “initiating, sustaining, and thriving in work” and is set to be implemented in approximately 15 areas across England.


In response, Bertrand Stern-Gillet, CEO at Health Assured, voiced skepticism about the announced ‘back to work’ plan, emphasising the need for tailored support for individuals returning from long-term sickness, especially in small organisations. Stern-Gillet warned against viewing working from home as a panacea and emphasised the potential negative impact on mental health.





The chancellor's announcements were also being watched closely by leaders in one of Scotland's major industries - whisky. It had been speculated that Mr Hunt would increase the tax applied to Scotch whisky to 15%. Instead, it is to remain at 10.1%, with all alcohol duty frozen.

"As well as confirming our Brexit pubs guarantee, which means duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until 1 August next year," the chancellor said.

Alcohol duty is a tax charged at the point of production or importation of drinks of alcoholic strength exceeding 1.2% alcohol by volume. There are different rates for beers, ciders, wines, spirits, and other fermented products. Typically, drinks with higher alcohol content are taxed at a higher rate. VAT is also charged on the duty-inclusive price.

A freeze in spirit duty from 2017 was ended in this year's Spring Budget, resulting in a 10.1% increase coming into effect in August. The Scotch Whisky Association (SWA) described this as a "hammer blow" for distillers and consumers and said it meant 73% of the price of the average-priced bottle was claimed in tax.

According to the SWA, £6.2bn worth of whisky was exported last year. It said this accounted for 77% of Scottish food and drink exports and 25% of all UK food and drink exports.

SWA chief executive Mark Kent said the chancellor's announcement provided much "much-needed certainty".

He added: "Despite today's duty freeze, cider is still taxed four times less than a spirit like Scotch whisky - this is not fair and cannot be justified."










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