On November 22, the Government’s Chancellor of the Exchequer Jeremy Hunt revealed the contents of his Autumn Statement for 2023.
The statement sets out the Government’s tax and spending plans for the next year, and has a number of measures which will affect beauty businesses.
Hunt commented that the Government has made difficult decisions in order to boost the economy and halve inflation, with his priorities including avoiding both big Government spending and high taxation.
The Chancellor said that forecasts from the Office for Budget Responsibility (OBR) show that the economy will grow by 0.6% this year and 0.7% next year, adding that economy is now 1.8% larger than it was before the pandemic, according to official figures.
The OBR indicated that inflation is expected to fall by 2.8% by the end of 2024 – it was 11.1% when Hunt and Prime Minister Rishi Sunak took office in October 2022.
How will the Autumn Statement impact beauty businesses?
National Insurance
- The main rate of employee National Insurance contributions will be cut from 12% to 10% from January 6, 2024. Hunt says this will affect 28 million people and will save someone on the average salary £450 a year.
- Class 2 National Insurance, which is paid by self-employed people earning more than £12,570 a year, will be abolished from April 2024. Hunt says this will cut taxes for 2 million people, with an average saving of £192 a year.
- Class 4 National Insurance for self-employed people, which is paid on profits between £12,570 and £50,270, will be cut from 9% to 8% from April 2024.
Wages
- The National Living Wage (the legal minimum wage) will increase from £10.42 to £11.44 an hour from April 2024. This new rate will also apply to 21 and 22-year-olds, rather than just people aged 23 and over as it is now.
- The National Minimum Wage for 18 to 20-year-olds will increase from £7.49 to £8.60 an hour from April 2024.
- The minimum wage for apprentices will increase from £5.28 to £6.40 an hour from April 2024.
- The state pension will be increased by 8.5% to £221.20 a week, worth almost an extra £900 a year.
Business tax
The “full expensing” tax break, which allows companies to offset investment in items such as new IT equipment and factory machinery, has been made permanent.
This allows companies to claim back up to 25p for every pound they invest in IT and machinery in the year they were purchased, rather than spreading it across multiple tax years.
In addition, the 75% discount on business rates (the tax paid on non-domestic properties) of up to £110,000 for firms in retail, hospitality and leisure will be extended for another year.
Beauty industry reaction to the Autumn Statement
Commenting on the Autumn Statement, Caroline Larissey, chief executive of NHBF (National Hair & Beauty Federation) said, "We’re delighted that the Chancellor has responded to our calls for a continuation of the 75% retail business rates discount. Along with cuts to National Insurance, this will give very welcome relief to businesses struggling to cover overheads.
"Sector recovery has been slow and steady since the spring and many businesses are still battling to clear Covid debts.
"With £50m allocated to apprenticeships in key growth sectors, we look forward to hearing more about how the hair & beauty sector will be supported. Employer incentives to support education and training particularly apprenticeships are desperately needed to ensure the future talent pipeline to our vibrant, creative and innovative sector.
"Given rising wage costs in the spring, sector employers, mostly small and micro businesses, won’t be rushing to take on new staff without additional support’.
