The UK Chancellor, Rachel Reeves, today announced her Autumn Statement. She focused on the need for fiscal and economic stability, promising to ‘fix the foundations’ in order to deliver change. She announced £40bn of tax rises, but also investment in the NHS, education, and housing in England, meaning more funding for the Scottish Government. It was a jam-packed budget, with employers most likely to be affected by an increase in employer National Insurance Contributions, as well as a rise in the minimum wage. See below for our summary of the key points for Edinburgh businesses.

OBR forecast

• The OBR forecasts the economy to grow by 1.1% in 2024, before increasing to 2.0% and 1.8% in 2025 and 2026. Growth then returns to around the OBR’s estimate of its potential rate, at 1.5%, 1.5% and 1.6% over 2027, 2028 and 2029 respectively
• Inflation is forecast to average 2.5% in 2024, before increasing to 2.6% in 2025

Pay and Taxation

• The Government will accept the recommendations of the Low Pay Commission to increase the National Living Wage (minimum wage) by 6.7% to £12.21 per hour from April 2025
• There will be a phased introduction of a single adult wage rate, starting with a 16.3% increase in the NLW for 18-20 year olds, bringing it up to £10 an hour
• The Carer’s Allowance Weekly Earnings Limit will be increased to allow carers to work the equivalent of 16 hours at the NLW
• From April 2028, the income tax and National Insurance contributions thresholds will be uprated in line with inflation
• The rate of employer National Insurance contributions (NICs) will increase from 13.8% to 15%
• The threshold at which employers become liable to pay National Insurance (the Secondary Threshold) will increase to £5,000from 6 April 2025
• The government will increase the Employment Allowance to £10,500 of an employer’s NICs bill, and also expand it by removing the £100,000 eligibility threshold
• Capital Gains Tax will see increases: the lower rate will increase to 18% and the higher rate to 24% from 30^th October 2024
• Fuel duty will be frozen at current levels, and the 5p cut extended for one year
• The freeze on Inheritance Tax Thresholds will be extended to 2030, but from April 2026 the agricultural property and business property reliefs will be reformed – the 100% rate of relief will continue for the first £1 million of combined agricultural and business assets and will be 50% thereafter
• New and higher duties will be introduced on vapes and tobacco products, whilst non-draught alcohol duty will increase in line with RPI
• Alcohol duty rates on draught products below 8.5% ABV will be cut by 1.7%
• The non-domicile tax status will be scrapped
• The Energy Profits Levy will increase to 38%, removing the 29% investment allowance, and extending the time the levy applies until 31 March 2030. However the decarbonisation allowance will be retained
• 20% VAT will be charged on private school fees from January 2025
• In England, the Government intends to introduce permanently lower business rates multipliers for retail, hospitality and leisure properties (RHL) from 2026-27, and these businesses will receive a 40% rates relief in the interim
• To provide stability and predictability for business, the Government will publish a Corporate Tax Roadmap, including a 25% cap on the main rate of Corporation Tax, along with a commitment to maintain R&D tax reliefs and the capital allowance offer

Investment and spending

• The UK Government will invest significant funds in the NHS, schools, justice system and other devolved areas in England. Through Barnett Consequentials, the Scottish Government will receive £3.4bn
• With increases in capital investment, the Government will invest over £35bn in economic infrastructure in 2025-26
• Long-term funding will be provided for growth-driving sectors as part of the Industrial Strategy, including £975 million for the aerospace sector over 5 years, over £2 billion over 5 years to support the automotive sector, and up to £520 million for a new Life Sciences Innovative Manufacturing Fund
• The UK Shared Prosperity Fund will be continued at a reduced level for a further year, providing £900 million; this transitional arrangement will allow local authorities to invest in local growth, in advance of wider funding reforms

Supporting business and trade

• Supporting Scottish trade by providing £0.75 million to establish Brand Scotland, a programme run by the Scotland Office to promote Scottish investment opportunities and exports across the globe
• A ‘Get Britain Working’ consultation paper will soon be published, to look at how more people can be supported into work
• Various initiatives have been announced and extended to support SMEs, including extending the Enterprise Investment Scheme and Venture Capital Trust schemes to 2035; a £4 million pilots package to encourage tech adoption for SMEs; and measures to discourage late payments
• Innovation Accelerators will be extended into 2025-26 to continue to bolster high-potential innovation clusters in the Glasgow City Region, Greater Manchester, and the West Midlands

Other

• The Budget formally launches the Office for Value for Money (OVfM)
• The Government has set UK Government departments a 2% productivity, efficiency and savings target for next year
• Support has been promised for two electrolytic hydrogen projects in Scotland (Cromarthy and Whitellee)

If you would like to share any feedback on the Autumn Statement, and how it might affect your business, please get in touch with our policy team at policy@edinburghchamber.co.uk