Ten key takeaways from the 2023 Autumn Statement

OBR dampens growth forecasts

The Office for Budget Responsibility revised down its GDP growth forecasts and brought up inflation predictions.

Inflation is now expected to average 4.8% in the final quarter of this year, 1.9 percentage points higher than predicted in the March forecast.

By 2028, prices are expected to be 7% higher than previously expected.

Meanwhile, growth forecasts were “slashed”, with GDP growth expected to be 0.7% in 2024, 1.4% in 2025, 1.9% in 2026 and 2% in 2027, a significant drop from the OBR’s forecasts earlier this year, which predicted growth at 1.8% in 2024, 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.

ISA overhaul

The Individual Savings Account regime will be simplified to make it easier for consumers to invest, as well as expanding the investment opportunities available, such as long-term asset funds and open-ended property funds “with extended notice periods”.

Fractional shares contracts will also be available for purchase through ISAs, the Statement revealed that certain fractional share contracts will become “eligible” for the accounts, and further engagement with stakeholders will take place down the line to finalise implementation.

Investment trust cost disclosure ‘interim solutions’

The Financial Conduct Authority said it was considering “interim solutions” to mitigate the impacts of current cost disclosure requirements on investment trusts, as the government “acts to implement a long-term legislative solution to the issue”.

In a draft statutory instrument, the Treasury outlined the UK’s new retail disclosure framework for Consumer Composite Investments, while noting concerns around current cost disclosure requirements.

Business rates cuts

Hunt announced significant business tax cuts in the Autumn Statement, aiming to unlock £20bn in additional business investment every year.

He revealed he would make “full expensing” permanent, which allows businesses to write off the full cost of qualifying plant and machinery investment.

Full expensing means that for every pound invested, taxes will be cut by up to 25p. Hunt described this as the “biggest business tax cut in modern British history”, claiming it is worth over £10bn a year.

Pensions

In a raft of pension reforms, Hunt said he would be consulting on ‘pot for life’ pension amendments, which would provide pension savers with a “legal right to require a new employer to pay pension contributions into their existing pension”.

Additionally, he confirmed the state pension would increase by 8.5% from April next year, as the government continues to back the triple lock policy.

VCT and EIS sunset clause extension

The government has extended the existing sunset clauses for enterprise investment schemes and venture capital trusts by a decade to 6 April 2035, after the Treasury confirmed last month that the clauses would be expanded to April 2025.

Short selling reforms

The FCA is set to receive powers to intervene in the short selling market in “exceptional circumstances”.

Draft regulations published alongside the Autumn Statement will grant the regulator the power to “prohibit or impose conditions” on individuals entering a short sale of a share or debt instrument, or any other transaction that offers “a financial advantage” in the event of a decrease in the price or value of another instrument.

The FCA would also be able to prohibit or restrict short sales in the event of a significant fall in the price of a financial instrument during a single trading day.

National Insurance cut widely and for self employed

National Insurance will be cut by two percentage points, from 12% to 10%, Hunt said.

The new measure will be implemented from 6 January 2024 “so people can see the benefits in their payslips from the start of the New Year”. He added the changes mean someone on an average salary of £35,000 will save more than £450 a year.

Additionally, to boost business growth, Hunt said he would be abolishing the Class 2 National Insurance for self-employed people.

He said: “After careful consideration, we are abolishing Class 2 National Insurance, saving the average self-employed person £192 a year.”

This measure “simplifies” and cuts tax for nearly two million self-employed people in the UK. Meanwhile, veterans will receive “greater National Insurance relief”.

NatWest

Shares in NatWest dropped 1.2% in the minute following Hunt’s indication that investors may be given access to a retail share offer next year.

The government sold out of £1.3bn of its NatWest shares in May, as it moves to return the high-street bank back to  full private ownership, a move Hunt reinforced in his parliamentary address.

IHT

Inheritance tax did not see any changes, despite being hinted at in the weeks leading up to the Autumn Statement

It was previously reported that Hunt was considering cutting IHT from 40% to 20%, however, this did not materialise today, following backlash from campaign groups and from MPs within the Conservative party.