The Autumn Budget Statement was said to be the result of difficult decisions Chancellor Jeremy Hunt and the government have had to make in order to get the economy back on track and inflation under control. And while it is certainly a start, Hunt insists “the work is not done.” The Budget revealed that the chancellor is prioritising avoiding big government spending and high tax. Instead, they are seeking to cut taxes and “reward hard work” with over 100 business growth measures.
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Here are some highlights for doctors and dentists from the Autumn Budget:
Economy
An extra £4.5bn is planned to be invested in manufacturing between 2025 and 2030, with about £1m dedicated to aerospace companies and businesses working on green technologies. In an effort to increase employment in key areas, there will be “investment zones” in Wrexham, Wales; Greater Manchester; and the west and east Midlands.
Personal Tax
From 6 January 2024, the main 12% rate of employee national insurance contributions will be cut two percentage points to 10%. This could potentially have an effect on 28 million people, allowing someone on the average salary to save £450.
Public Spending
The chancellor says that the approach to government spending on public services will be a responsible one, focusing on tackling waste. After accounting for inflation, the Office for Budget Responsibility (OBR) estimates that Hunt’s public spending measures will result in a £19bn reduction in spending. The attempt to reform public services is meant to make a “more productive state not a bigger one.”
Inflation
By the end of 2024, inflation is expected to have fallen to 2.8% according to the OBR. If all goes according to plan, that is a massive drop from last year’s rate of 11.1% when Chancellor Hunt and Rishi Sunak took office. The spending watchdog does expect inflation to stay higher for longer, though, and that it won’t reach the Bank of England’s 2% target until the middle of 2025, a year later than originally forecasted. This also means that interest rates will stay elevated, likely staying around 4% until 2028.
Business tax
“Full expensing,” which allows businesses to offset investments in things like IT equipment or factory machinery against tax will be made permanent. Hunt adds that the latest measures will help to increase business investment by about 1% of GDP.
Importantly for some doctors and dentists, the chancellor wants to reform taxes paid by self-employed individuals. Hunt will abolish their “class 2” National Insurance contributions, cutting taxes for 2 million people. “Class 4” contributions will be getting a one percentage point cut. Both of these measures combined are worth £350 a year. Additionally, there will be business rate discounts for hospitality, retail, and leisure amounting to £4.3bn.
Wages and benefits
With this latest set of welfare reforms, Hunt says that he will get 200,000 more people into work, with mandatory work experience for individuals claiming benefits if they fail to secure a job within 18 months. And while most benefits will be increased by 6.7%, there will be tougher requirements for claimants. And for some households, the local housing allowance, which was previously frozen, will increase, presenting a savings of up to £800 for some households.
Speak with an adviser to determine what’s next
Does anything detailed in the latest Autumn Budget affect you? Get in contact with the experts at Dental & Medical Financial Services to review your current plan and discuss any changes you might need to make to account for these new measures.