Proactive Investors -
- FTSE 100 down 2 points at 7,480
- NI cut, business taxes on the agenda in Autumn Statement
- Sage soars after buyback; Kingfisher (LON:KGF) hit by weak trading
National insurance cut a less generous tax-cutting option
Sarah Coles, head of personal finance, Hargreaves Lansdown (LON:HRGV) notes while any tax cut is “better than nothing,” a reported cut to national insurance “would be one of the least generous options for cutting income-related tax in the Chancellor’s playbook.”
She explained that if it keeps NI and income tax thresholds frozen, the Treasury will have done nothing to protect people from the misery of fiscal drag, and means the lion’s share of the damage done to finances from these tax hikes will still continue to be felt years down the line.
By focusing on National Insurance, it also limits the income boost to workers under state pension age, so there would be no tax cut for pensioners, she noted.
She estimated a 1% cut in the 12% rate would mean £75 a year more for someone on £20,000 (or £6.25 a month), £175 for someone earning £30,000, £275 for someone earning £40,000, £375 for someone earning £50,000, and £377 for anyone earning over the higher rate tax threshold.
A bigger cut - of 2% - to this rate would be more of a boon, cutting £149 off the tax bill of someone earning £20,000, £349 for someone making £30,000, £549 for someone making £40,000, £749 for someone making £50,000 and £754 for anyone earning over the higher rate tax threshold.
Intermediate Capital set to replace Hargreaves Lansdown in FTSE 100
The indicative results of the FTSE reshuffle were released last night by FTSE Russell with Intermediate Capital expected to join the blue-chip FTSE 100 index.
Investment platform Hargreaves Lansdown is currently set to be demoted, ending a 12-year reign in the FTSE 100, while private-equity fund manager Intermediate Capital is set to be promoted.
In the FTSE 250, cycle and car retail and repair specialist Halfords (LON:HFD) is on track to join, along with oil explorer Tullow Oil (LON:TLW), gold and silver miner Hochschild and Asia Dragon Trust, an investment trust focused on Asian stocks.
Those set to leave the FTSE 250 include William Hill-owner 888 Holdings (LON:888), property firm CLS Holdings, Liontrust (LON:LIO) Asset Management (LSE:LIO), and CAB Payments, which has suffered a dramatic fall from grace after its recent listing.
It slumped 72% in a single day in October after a profit warning.
The final changes will be calculated using closing prices on November 28 and announced the following day.
Autumn Statement - what to expect
With speculation mounting as to what to expect from today's Autumn Statement, here is the checklist from the well-connected political editor at The Times, Steven Swinford.
He is predicting:
- NI cut for 28 million people
- Full expensing made permanent
- Benefits uprated by 6.7%
- State pension up by 8.5%
- Living wage up to £11.44 (already announced)
- Business VAT threshold up
Autumn Statement:* NI cut for 28m people
* Full expensing made permanent
* Benefits uprated by 6.7%
* State pension up by 8.5%
* Living wage up to £11.44
* Benefit claimants made to look for work
* Business VAT threshold up
— Steven Swinford (@Steven_Swinford) November 22, 2023
The Financial Times said the plans to make the ‘full expensing’ capital allowance regime permanent will form the centre point of Hunt's statement.
The scheme, which was due to expire in 2026, allows a company to immediately deduct all of its spending on IT equipment, plant or machinery from taxable profits. Extending it was a crucial demand of business groups.
Extending it was a crucial demand of business groups and officials claim Hunt’s permanent extension would give the UK one of the world’s most generous capital allowance regimes, the FT said.
Hunt will also more than 100 supply-side reforms, it said, plus measures to get the sick back to work.