It’s the end of the year! I hope you had a wonderful Christmas. There’s been some news over the last couple of months that may be valuable for you to make note of as we head into 2024!

Here’s all the latest updates in the world of business and tax…

Fall In Inflation

Inflation fell last month to 3.9%, the lowest rate in 2 years.

The ONS has credited falling petrol prices for the drop in inflation, and whilst this is still nearly double the 2% target for inflation, it does at least mean the price of fuel especially will cost people less.

However, with energy bills still remaining high, unfortunately the financial pressure isn’t set to ease greatly for families who are struggling at this time of year.

Recession Potentially on The Horizon

GDP fell by 0.3% in October and was thought to be stabilising again, with Chancellor Jeremy Hunt affirming that it was “inevitable GDP will be subdued” while interest rates were high to fight inflation.

However, new figures have shown that The UK economy shrank between July and September, contracting by 0.1%.

There was no growth between April and June, despite reports suggesting the economy had grown by 0.2%.

If figures revealed in the new year show that the economy shrunk over the last quarter of 2023, the UK could go into a recession.

Government Borrowing Higher Than Expected

Despite decreasing in November, Government borrowing has remained high. Last month, borrowing was £14.3bn, above the £13bn forecast.  Borrowing for this financial year has reached £116.4bn – £24.4bn more than the same period last year.

The ONS have explained why borrowing is higher, saying “Payments relating to the energy price schemes that began in October 2022 have now stopped. However, these reductions in spending were offset by other inflation-related costs, such as increased benefit payments.”

New Income Tax Band In Scotland

The Scottish Government has raised tax for some of the highest earners in Scotland for the 2024/25 tax year. The key changes are…

Basic (20%) and Intermediate tax (21%) thresholds will increase, meaning people will be able to earn more before they start paying these rates.

The Starter (19%) and Basic (20%) rate bands are rising, meaning more of workers earnings will be taxed at these lower rates.

Those who have earnings of £75,001 to £125,140 will now be taxed at 45%, an increase from the current 42%.

The Top tax rate will increase by 1%, from the current 47% to 48%.

Bank Of England Hold Interest Rates

Interest Rates have remained 5.25% for the third consecutive month.

There are concerns that rising the rates will mean it’s more expensive to borrow money. The rates have risen 14 times since December 2021, in order to try and bring inflation closer to the 2% target.

Final Cost Of Living Payment Coming In February

The government has announced that the third and final cost of living payment will be in February 2024.

8 million households and specific tax credit and benefits will receive their last £300 from the scheme, which began in April 2023 to help those in need of financial support.

That’s all for December! Have a great New Year and remember to keep an eye our for any business and tax news updates in January!