Earlier in the year The Herald hosted the Budget Briefing Breakfast in association with Wright, Johnston & Mackenzie LLP, The Business Insurance Bureau, The Wise Group and Martin Aitken & Co Ltd.

Grant Johnston, Wealth Planning Expert at Wright, Johnston & Mackenzie, gives his take on the UK Chancellor’s Autumn Statement.

In the lead up to this budget there were suspicions it would contain a lot more noise than substance. We were hearing a lot about tax cuts, but given the rate of public sector strikes and pay increases there wasn’t much room to play with.

My expectations were mostly met, though I was conservative about this Conservative budget, and rightfully so. When looking at the big picture, there has been some minor tinkering with numbers here and there, but nothing that changes the balance sheet at the end of the year.

Our wealth planning specialists watched with interest – though low expectations – amid the usual rumours about potential Inheritance Tax (IHT) cuts or abolishment. As suspected, they came to nothing. We know that IHT effects a very small percentage of the population, so it would be a strange move to see it scrapped at this time.

The Herald: Grant Johnston, Wealth Planning Expert at Wright, Johnston & MackenzieGrant Johnston, Wealth Planning Expert at Wright, Johnston & Mackenzie (Image: Wright, Johnston & Mackenzie)

Perhaps the most interesting fact to come out of all this is that despite all the talk of tax cuts, the OBR has stated that tax charged relative to the size of the economy is set to rise to 37.7 per cent by 2028 – a post WW2 high.

In less than four weeks the Scottish Government will be unveiling its budget, though Shona Robison has already reportedly said Hunt has failed to provide the funding devolved governments need. We’re hearing speculation about the potential upping of income tax for high earners in Scotland so we’re watching this space with interest.

In terms of the cost of living crisis, at face value, the statement does attempt to offer some cost-of-living relief.

National living wage is up by over £1 an hour across the board, with 21 and 22-year-olds seeing the biggest rise from £10.18 to the National Living Wage (previously reserved for over 23s) now at £11.44 an hour. 

Scottish workers will see the UK-wide cut in National Insurance. To put that into context, those on a salary of £35,000 will now save around £450 a year, with the self-employed seeing “Class 2” charges abolished.

At the same time, UK-wide benefit spending will increase by 6.7 per cent in line with September’s inflation figure, and the rumoured threats to the triple-lock pensions remain empty.

Some nice headlines in there, but Government spending has already been affected by industrial action in the last couple of years with most of the budget reflecting this new expense and showing that there has not been much room to wiggle.

Ultimately, the Office of Budget Responsibility (OBR) Living standards, as measured by real household disposable income per person, are forecast to be 3.5 per cent lower in 2024-25 than their pre-pandemic level.

Reflecting on affects that the budget update will have on businesses, the previously introduced “full expensing” that was due to expire in 2026 is now a permanent tax break. This policy allows companies to offset investment in machinery and equipment against tax, which will be well received by many businesses in Scotland.

Business rates are frozen for the year ahead, but that does not include Scotland’s own business rates which is administered by the Scottish councils. We will likely see businesses put a lot of pressure on the Scottish Government to follow the Westminster freeze. Nonetheless, I know many in the field certainly don’t expect it.

Looking forward to the next budget in spring 2024, it’s hard to say what will be in the next full Budget, but it is unlikely that we will see much improvement in the economy in that time. I suspect that statement will suffer from the same lack of wiggle room, although it is likely we’ll see plenty of political posturing as we get close to a general election which may produce more radical changes to what we have seen this week. Brace yourselves.