Scotland awaits the Chancellor’s Autumn Statement with great interest

The Chancellor of The Exchequer is due to deliver his Autumn Statement to the House of Commons on November 22 and the hope of many is that he will use this opportunity to reduce the financial pressures on individuals by reducing the household tax burden.

The economic outlook is, however, challenging to say the least and it is unlikely that the Chancellor will bow to current political pressures to significantly reduce taxes. Instead, he will likely announce measures to aid businesses and investment to increase future growth prospects for the economy. 

What is the economic outlook for Scotland?

Growth in Scotland is forecasted to be lower than the rest of the UK and there are many businesses and industries north of the border that will await the Chancellor’s comments with great interest.

The Scottish drinks industry will be looking closely to see if there will be any cut or freeze to spirits duty as the excise duty on spirits rose 10.1% in August 2023. The Scottish renewable industry would welcome infrastructure investment and additional tax incentives.

Following announcements that oil production licenses will be awarded every year, the oil industry will be interested to hear any comments on the energy profit levy which currently taxes profits up to 75% from UK operations until March 2028.

Some positive measures that may be announced for businesses in general, are expanding the investments that qualify for full expensing of capital expenditure to offset corporation tax rises applying from April 2023, or extending this temporary relief scheme beyond 2026. More details are also awaited on the single research and development (R&D) relief scheme which will take effect from April 2024.

Possible implications for the December Scotland Budget 

The Scottish Government, which will be presenting the Scottish Budget in December, will also be watching for any announcements on government department expenditure which may impact the Scottish block grant and put further constraints on the overall Scottish Budget.

Households are likely to have to wait until the Budget in Spring 2024 to see if there will be significant tax cuts in advance of the General Election, expected later in 2024. Until then we may see changes being made to Individual Savings Accounts to encourage investment in UK companies and further increases to the national living wage rates.

There may also be incentives given to employers to provide occupational health benefits to get more people back into work and an extension to the Mortgage Guarantee scheme which is due to finish in December 2023. The Chancellor may also take the opportunity to announce changes to the way the triple lock for pensions is to be calculated or a review of inheritance tax which, for those affected, remains a deeply unpopular tax.

The general consensus is that the current back drop of high inflation and lower growth will constrain what the Chancellor will do, however, plans put forward on promoting growth and investment may lay the groundwork to provide greater opportunities for future and more significant pre-election tax cuts.

For more insights on potential measures from the Chancellor in his Autumn Statement, view our full Wishlist article.