What accountants can expect from the Autumn Statement

Chancellor Jeremy Hunt is set to deliver the Autumn Statement on Wednesday. As an experienced minister Hunt is unlikely to deliver anything that will keep accountants awake at night, but there are several likely changes that will be of great interest.

Potential for Tax Cuts

In the last few months there has been a lot of chatter about the potential for tax cuts in the Autumn Statement. The assumption was that personal tax reductions might be shelved for now, considering their cost and potential inflationary impact. The spotlight was on Inheritance Tax as an alternative.

However, recent reports from well-connected political journalists have stirred speculation that NICs or income tax cuts might reappear on the Chancellor’s agenda. The improvement in fiscal figures has granted Hunt some leeway, prompting contemplation of more expansive measures than previously anticipated. Prime Minister Rishi Sunak added more fuel to this fire on Monday by indicating inflation had come down enough for tax cuts to be on the table.

This raises a critical need for payroll teams to prepare for potential alterations in employee pay structures. Robust cloud software, as demonstrated last year during NICs adjustments, will prove instrumental in swiftly adapting to any changes.

Inheritance Tax: Policy Overhauls Possible

Anticipated reforms to inheritance tax have been brewing for months. Positioned as less inflationary and fiscally conservative than income tax cuts, these changes are also less expensive. However, their impact is limited to a smaller cohort of affluent individuals, reducing their political allure. Reports hint that proposed inheritance tax revisions might have made way for potential income tax adjustments, marking a shift in priorities.

Accountants specialising in family enterprises and high-net-worth individuals should gear up for substantial shifts in inheritance tax policies. Even if these alterations don’t materialise, heightened public attention due to media coverage makes it a pressing topic for clients.

Living Wage and Minimum Wage: Detail on Boosts

Hunt’s announcement at the Conservative Party conference forecasted an increase in both the minimum and living wage come April, with the minimum wage aiming for £11 per hour. Further details on these alterations are anticipated, either in the upcoming statement or early next year during the Spring Statement.

This development holds immense significance for payroll professionals, particularly those managing salary sacrifice schemes like car lease programs. A cautious approach is crucial to prevent inadvertent underpayment of employees in compliance with the minimum or living wage standards. Non-compliance consequences can be severe, emphasising the need for meticulous checks before the changes take effect.

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