Autumn Statement 2023: predictions
I’m not sure whether it’s the chilly weather and darkening evenings, but when asked to dust off my crystal ball and make some pre-Autumn Statement predictions, I have been struggling to feel upbeat about what may be announced.
An Autumn Statement before an election year is usually an opportunity for a Chancellor to start setting out his party’s stall and to deliver positive news for an electorate warming up to go to the polls.
While Mr Hunt may have more in his coffers than expected due to bumper tax revenues, my prediction is not to expect many crowd-pleasing giveaways on Wednesday.
Steadying the ship
In a notable recent LinkedIn post and through comments to the media, the Chancellor’s rhetoric has consistently focused on steadying the ship and reducing inflation. As such, although Income Tax cuts are being suggested, I think it’s unlikely we’re going to see significant cuts given they generally have the opposite effect on inflation.
Similarly, I expect that public spending is likely to be tightly controlled. Cuts to services and spending are difficult due to the current morale of the health and education sectors, but big increases in spending are also unlikely given a desire to reduce national debt following the lingering effects of Covid investment by the Government.
Instead, I think we can expect lots of fanfare about how the Government will make it easier for businesses to invest and do business, including being able to take advantage of reduced red tape following Brexit. This may be accompanied by some announcements to encourage and reward private sector investment in business.
There is likely to be the usual trumpeting of targeting tax avoidance and plans for HMRC to take advantage of digital efficiencies in collecting tax and chasing those who don’t pay. I’ve heard a rumour that there may be an update on Making Tax Digital (MTD) – which so far seems to have a timescale similar to NASA’s plans to visit Mars! Although I think the original purpose of MTD has fallen by the wayside. Any eventual benefits of it to the Exchequer are hard to see, so unless a canning of the whole project is announced, I think any update may be somewhat uninspiring to the average tax payer.
What changes would be welcome?
It’s worth remembering that previous Chancellors have been known to pull a few rabbits out of a hat so, just in case Mr Hunt needs some inspiration for a bunny or two, I thought I would muse on what I would like to see in the Autumn Statement 2023….
A cut to corporation tax or at least an increase to the small company bands so that more smaller businesses are sheltered from the 25% rate.
Back in 2015 (the last time we had a small companies rate of corporation tax) a small company was one that had profits of under £300,000 and a large company had profits of over £1.5m. Today’s profit bands of £50,000 and £250,000 seem paltry in comparison even without taking into account the last eight years of inflation. Admittedly, the large companies tax rate was 30% back in 2015, but I think there is definitely room for improvement here.
Generous incentives for businesses and individuals to invest in UK-designed or built green technology.
There is currently a myriad of new technologies that can be adopted and I have seen over the years that tax relief and grants are a sure fire way to encourage rapid adoption. Combined with some sort of “Buy British” condition, a well-targeted incentive could boost both our journey to Net Zero and the economy.
A tax framework that fairly recognises professional landlords as a vital part of our housing sector, and a reinstatement of full tax relief for interest for landlords.
An ask that is definitely on the wish list rather than the likely list, but having access to a healthy rental stock of properties at a fair rent is vital for certain people, including those looking to save for their first home. Rising interest rates combined with the restriction on tax relief for individual landlords will certainly drive some of these properties out of the market or rents upwards, neither of which will be good for renters themselves.
Whatever 22 November brings, I can definitely predict that myself and the BHP tax team will be poring over the details and providing our clients with updates on all aspects. Stay tuned to our socials for updates and, don’t forget, my fellow tax partner Chris Humphreys will be hosting a free-to-access webinar the following morning. You can reserve a place on the webinar here to help make sense of it all.