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Tax – Good News On Fuel & NI But Windows Blown Out Again
Chancellor Rishi Sunak has announced cuts in fuel duty and national insurance and promised no VAT on energy efficiency home improvements – but not...
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Hunt’s Headlines – Industry Reacts
Jeremy Hunt’s autumn statement has been welcomed for cutting National Insurance and making tax easier for the self-employed. Being able to claim tax relief on investments is seen as positive too. It is still rated as ‘fanciful’ in its attempts to inspire house building.
The statement is presented instead of a budget – most of the effects will not play out until the spring of 2024.
National Insurance will be cut from 12% to 10% for 27 million working people from January – putting £450 back into the pocket of the average worker earning £35,400.
Tax is also to be cut and simplified for 2 million self-employed workers, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 - will effectively be abolished, with no one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate.
A minimum wage rise represents a boost of £1,800 to the average annual earnings of a full-time worker. (21 and over – £1.02 to £11.44; 18-20 – £1.11 to £8.60; 16-17 – £1.12 to £6.40; and apprentices – £1.12 to £6.40.)
Alcohol duty has been frozen for six months to August.
State pensions have been protected to rise with inflation.
Full expensing
As signalled at the spring budget, the Chancellor announced permanent ‘full expensing’ (which was previously known as the super deduction) for those companies investing in IT equipment, plant and machinery. It means they can write off 25% of their investments against tax.
The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system.
The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19% and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
Energy
The Climate Change Agreement Scheme will be extended, giving energy intensive businesses such as glass, steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.
Planning
Hunt also reiterated that a Conservative government has wants to overhaul the country’s planning system. He said it would introduce a new premium planning services across England with guaranteed accelerated decision dates for major applications and fee refunds wherever these are not met.
Reaction
Reaction has been mixed with Peter Hogg, UK cities director at Arcadis, saying: “National Insurance cuts, a duty freeze on alcohol, the pensions triple lock and benefits increases will be the headline-grabbing crowd pleasers but was this a statement for business?
“Making expensing permanent will be welcomed by business but the chancellor made a big play of his ‘planning reform’ but cynically, his proposal is little more than applicants paying more to get the service they should have got anyway; to think that this is going to turn the dial on housing delivery and development is fanciful.”
Sir John Armitt, chair of the National Infrastructure Commission
“This was an autumn statement by a government that appears to have little insight into the challenges faced by those working in property and construction, having shuffled 16 housing ministers in 13 years and just cancelled HS2. Of the measures announced, full expensing is to be welcomed but is only helpful if you have projects requiring you to buy plant and machinery. It doesn’t help firms struggling to make a profit or investing in people. It’s all jam tomorrow and while planning reforms sound appealing they take time to implement and may not be supported by any future government.
“Where was the VAT relief on the greening of housing stock when over 31m people live in buildings that meet sub-standard EPC ratings. £50m to support apprenticeships is meagre. We were promised 110 measures to help industry but in fact there was little there to inspire confidence and stimulate investment.”
Graham Harle, chief executive, Gleeds
“According to the latest data, construction starts in London are at the lowest point since 2009. Consequently, the industry is in dire need of support. Considering the Chancellor’s focus on supply-side measures, this was an ideal chance to provide this backing as well as be radical and listen to those 66% of Londoners aged 25-45 who would have welcomed development on the green belt if it meant more homes. As a representative of the SME sector, it is therefore disheartening to see our suggestions for supply-side interventions, proposals that could potentially unlock an additional 1.6 million new homes at no extra cost to the Treasury, overlooked once more.”
Brian Berry, Chief Executive of the Federation of Master Builders
“Speeding up planning, cutting taxes for small businesses, increase support for business investment and financial backing to boost apprenticeships are welcome steps and it will be welcomed by small builders. However, this must only be the start if the government is serious about tackling the challenges we continue to face. Measures to reform the way local authorities process planning applications is good news, as are plans to help fund local authorities tackle nutrient neutrality mitigation. However, substantial increases in funding for local authority planning departments are needed if we are to see real progress.
“There were some surprising outcomes, like the changes to permitted development rights, which will bring work for house builders and the repair, maintenance, and improvement sector. Buried in the details is additional support for housing associations to deliver energy efficiency improvements. This support should also be rolled out to the owner occupier sector to help improve the UK’s leaky housing stock.”
Marc Vlessing, chief executive, Pocket Living
“The government heard the furious backlash to its green policy rollback last month; and this was a chance to realise the scale of their error by shoring up protections for struggling households and small businesses and get energy bills and carbon emissions under control. It’s not that the government hasn’t been presented with the ideas to address the problem. Industry has been offering oven-ready policy proposals such as modernising Stamp Duty with a ‘rebate to renovate’ incentive for households that would accelerate home insulation, cut our reliance on polluting fossil fuels and motivate people to switch to low carbon heating and install solar panels – all while also ‘backing British businesses’ by creating a large-scale, long-term retrofit market to support industry and deliver skilled jobs throughout the country. We hope it will be announced in the Spring Budget.”
Dr David Crosthwaite, chief economist at Building Cost Information Service
“For house builders, the promise of more streamlined planning processes and investment in new schemes may be welcomed but we can’t forget that the significant slowdown in the housing market has been primarily caused by high interest rates creating a lack of demand. The housing sector would benefit more from tangible growth in the economy, which could in part have been boosted now by transparency around and commitment to infrastructure plans.
“Other measures, which will be welcomed by the industry, include a slice of a £50 million investment pot for engineering apprenticeships but this doesn’t address a much wider skills gap we have across construction.
“The abolition of class 2 NI contributions for the self-employed, a growing demographic in our industry, is a saving of just £3.45 a week and so a drop in the ocean considering the considerable costs construction trades have faced and continue to face.”
Melanie Leech, British Property Federation chief executive
“With one eye on the General Election next year, this was always likely to be an Autumn Statement primarily aimed at helping working households and businesses. For UK construction product manufacturers, it is the full expensing announcement that will resonate most with them. While these announcements are helpful, the Chancellor could have gone further with industrial policy by providing a clearer strategy on key growth areas. Equally, more could be done on housing supply and home buying, as well as energy efficiency in housing such as introducing a green stamp duty.”
Picture: Jeremy Hunt.
Article written by Brian Shillibeer
24th November 2023