- Admin console
Google Voice: Business Phone System & Plans Stay connected and save time with an easy-to-use business phone solution that fits organizations of any size.
Work from anywhere
Your Voice line works on mobile devices, laptops, and supported deskphones so you can stay connected at work, home, or on-the-go.
Voice can be customized to fit your day-to-day workflow. Number assignment, porting, and billing are neatly consolidated in the familiar Google Workspace Admin console.
Voice uses Google AI to help save you time by blocking spam calls and transcribing voicemails to text automatically. Integrations with Google Meet and Calendar help keep the focus on what's important.
Voice can be deployed instantly — and globally — from anywhere, with less administrative work. This feature includes easy set up of multi-level auto attendants and ring groups (also known as hunt groups).
Works with Voice
Expand your reach with sip link.
SIP Link allows customers to connect PSTN services from any carrier to Google Voice through certified Session Border Controllers (SBCs).
Trusted by organizations of many sizes, Polycom® devices and certified headsets provide reliable solutions for business communication.
Receive valuable meeting context from Google Meet Manage your work-life balance with Google Calendar
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Easy for users.
Built for Google Workspace, Voice has a familiar look and user-friendly feel that fits easily into their workflow.
Easier for IT
Make it simple for your IT team to stay on top of their work with Voice, an integral part of the Google Workspace family.
Smart for business
Manage costs for your business with three license editions that help you streamline operations with Voice and Google Workspace.
Choose the right business phone plan for you.
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Our sales team now uses Google Voice to call and text customers from their smartphones, tablets, and the web. And because it is considerably more affordable to operate than our legacy VoIP systems, we continue to steadily expand our usage of Google Voice.
Nerina Martinez, Senior Director of Technology at Iron Mountain
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10 best VoIP phone services in 2023
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
Updated 6:04 p.m. UTC Nov. 9, 2023
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A VoIP (Voice over IP) can help you run your business more efficiently and save on operating costs. But with the large variety of VoIP services on the market, how do you know which one is best for your company?
We performed an in-depth analysis of two dozen providers and pored over features, capabilities, customer service, pricing and customer reviews and ratings to find the best VoIP services of 2023. Here are the ten companies that came out on top.
Best VoIP services in 2023
: Best for new users
: Best for text integration
: Best for bundling with devices
: Best for app integrations
: Best for affordable plan options
: Best for creating reports
: Best for scalability
: Best for voicemail transcriptions
: Best for the team collaboration
: Best for flexibility
Best VoIP services comparison
Methodology, what is a voip service and how does it work, how to choose the best voip service for your business, how much does a voip service cost, types of voip services.
- Frequently asked questions (FAQs)
Why trust our small business experts
Our team of experts evaluates hundreds of business products and analyzes thousands of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 25 companies reviewed.
- 20 hours of product testing.
- 960 data points analyzed.
Best for new users
Live chat support, what you should know.
Google Voice offers a lot of features for your small businesses’ phone and texting needs, such as unlimited text messages within the United States and built-in voicemail transcriptions. You can also make international calls for a low rate and screen incoming calls.
Google Voice offers three plans — Starter, Standard and Premier — starting at $10 per month. With the standard and premier plan, you can have an unlimited number of users, along with unlimited regional and domestic locations.
If you’re just starting out and wading through the ins and outs of VoIP services, and want reliable service and connectivity, Google Voice is a strong choice.
Pros and cons
- Plans start at a relatively low price.
- Unlimited texts in the U.S.
- Voicemail transcription.
- No toll-free numbers available.
- Small handful of third-party integrations.
Best for text integration
There’s a lot to like about Dialpad for small businesses: a unique business phone number per team member, transcriptions for meetings, voicemails and real-time calls. What particularly stands out about Dialpad is its messaging features, which allows team members to integrate messaging through text and audio chat rooms. Plus, you can share files.
Dialpad offers three plans — Standard, Pro and Enterprise — starting at $23 per month. With all plans, you can benefit from unlimited calls, unlimited meetings for up to 10 participants, integration with Google Workspace and Microsoft 365 and real-time analytics and reporting. Dialpad is particularly useful for small businesses that lean heavily on messaging for their day-to-day communications, and want to streamline correspondence.
- Integrated messaging features.
- Meeting, call and voicemail transcriptions.
- 14-day free trial.
- Designated business phone number.
- Limited integrations in basic plan.
- Meetings only host up to 10 participants.
- 24/7 and phone support is not available with the basic plan.
Best for bundling with devices
Intermedia Unite offers a suite of prebuilt app and software integrations with popular platforms like Outlook, NetSuite, Google Workspace and Salesforce. What’s particularly notable about this VoIP service is that you can use a deskphone, webcam or headset to provide greater ease and support in your communications.
Intermedia Unite offers two plans: Unite Pro and Unite Enterprise. Plans start at $27.99, with the enterprise plan offering more features, like an exchange mailbox, more video conferencing participants and supervisor functions. Intermedia Unite is best for companies that want many features and might lean on non-cell phone devices, such as sales and marketing companies.
- Free phone or device for every line.
- Offers a free trial.
- Software and app integrations.
- Customers reported issues reaching out to customer support.
- Limited call monitoring.
- Need to upgrade to get customer support features.
Best for app integrations
While other VoIP services offer integration with third-party software and apps, none seem to rival the vast options of RingCentral. The platform has partnered with over 300 companies, including Google Workspace, Salesforce and Microsoft. There is also the option to work with a developer and build your own app.
RingCentral offers three plans: Core, Advanced and Ultra, starting at $30 per user per month. 24/7 support is included with even the basic plan, along with unlimited domestic calling, analytics for IT administrators and access to APIs. RingCentral is best for companies that lean heavily on a variety of apps and software for their communication needs.
- 24/7 support offered with the basic plan.
- Free 14-day trial.
- Many integrations available.
- Customer service can be spotty.
- Hardware is expensive.
- Limited analytics.
Best for affordable plan options
Zoom Phone includes most of the key features you’d want in a VoIP service provider with its basic plan, which is $10 a month per user. This includes unlimited internal calls, texting, use from multiple devices and a number for U.S. and Canada.
However, as the number of users rises, so does the cost. Also, if you need features such as unlimited outbound calling, you will need to purchase a higher tier plan. If you need toll-free numbers added, this will be an additional cost as well.
Zoom Phone might be the best fit for smaller teams that are looking for a VoIP largely for internal use and uses video conferencing, texting and phone calls to communicate.
- Unlimited international calls as an add-on.
- Can toggle between video and calls.
- Most key features are included in the basic plan.
- Additional phone numbers can be costly.
- No free trial available.
- Limited integrations.
Best for creating reports
Nextiva’s standout feature is its ability to create comprehensive, in-depth and customized reports, which can include anything from the number of inbound and outbound calls to toll-free calls and number of missed calls within a certain period.
Nextiva offers three plans — Essential, Professional and Enterprise — starting at $24.95 per user per month (if you have over 100 users). This might not be the most cost efficient option for smaller teams, with the basic plan starting at $30.95 per month per user with four or fewer employees.
Nextiva could be a good fit for businesses that want main features of a VoIP, and need to pore over call and other communication data to steer the course of their companies.
- Free local and toll-free numbers.
- Unlimited calls in the U.S. and Canada.
- Reporting and analysis features.
- Many integration options are only available with higher-tier plans.
- No free trial.
- Customer service could be better.
Best for scalability
Cisco’s Webex Calling offers a full suite of features, such as unlimited domestic and long-distance calls, a business phone number and six-way conference calling. Where Webex shines is its ease to scale: the pricier tiers allow local and unlimited cloud meetings and meetings of up to 1,000 attendees.
Pricing starts at $17 per month per license and increases to $25 per license per month for the middle-tier plan. The highest plan, however, doesn’t offer direct pricing on its website. You will need to contact the company’s sales department to learn more about this plan’s pricing. The highest plan will only benefit customers who need features like:
- Call recording.
- The ability to stream meetings to YouTube or Facebook.
- Unlimited cloud storage.
- Up to 100 individuals are allowed in meetings with the basic plan.
- Integrates with over 100 software and apps.
- Cloud recording is included.
- Only local storage, no cloud storage, for basic plan.
- No pricing listed for the highest plan.
Best for voicemail transcriptions
While Line2 only has one plan available, it might be the only one you need if your business relies heavily on voicemail transcriptions or fax and if you are eager to get things set up and running.
Its plan costs $15.99 per month and includes a 30-day money back guarantee. It includes many basic features that would help small businesses, like:
- Call blocking and screening.
- Call forwarding.
- Unlimited SMS & MMS text.
Line2 is best for small businesses that do a lot of phone calls with outside parties, where keeping a paper and voicemail trail is essential — think companies that work with a lot of vendors or are in sales.
- Voicemail transcriptions included.
- Has a monthly fee that doesn’t include a per user fee.
- Includes incoming fax.
- No integrations with third-party apps.
- No videoconferencing.
- Only one plan available.
Best for the team collaboration
Vonage Business Communications offers expansive tools for teams and collaboration, which includes the option to set up virtual conferences, the ability to announce the purpose of a call before taking it and team messaging and chat functions.
Vonage starts at $13.99 per month per line, increasing to $27.99 per month for the highest plan option. There are many add-on options listed on its website, including:
- Speech analytics.
- Virtual assistant.
- CRM integrations.
- Screen recording.
- Workforce management.
We recommend Vonage for teams that not only work closely together, but also rely on phone, chat and video conferencing to collaborate and meet their objectives.
- Analytics and reporting tools.
- Around-the-clock customer support.
- Many different features for team collaboration.
- Additional features come with a cost.
- Fewer video conferencing tools.
- On the pricier side.
Best for flexibility
Ooma Office doesn’t require a contract and you can cancel at any time. There are also plenty of add-ons, including a user extension and various hardware, that can be tacked on to customize your plan.
Plans start at $19.95 per user per month, with the highest plan, Pro Plus, starting at $29.95 per month. If you need features like CRM integration and videoconferencing for up to 100 employees, then the Pro Plus plan would be the best option.
Ooma Office is best for businesses that are just starting out or would prefer to go with a no-strings attached VoIP provider.
- Virtual receptionist.
- Flexible service.
- No contracts.
- One-time activation fee.
- Limited messaging options.
We extensively research the key competitors within an industry to determine the best products and services for your business. Our experts identify the factors that matter most to business owners, including pricing, features and customer support, to ensure that our recommendations offer well-rounded products that will meet the needs of various small businesses.
We collect extensive data to narrow our best list to reputable, easy-to-use products with stand-out features at a reasonable price point. And we look at user reviews to ensure that business owners like you are satisfied with our top picks’ services. We use the same rubric to assess companies within a particular space so you can confidently follow our blueprint to the best VoIP services.
The best VoIP services have positive user reviews on customer review sites and app stores. Applicant tracking system companies should provide customers with fast and reliable support. Using a combination of phone support, live chat and knowledge bases, customers should be able to quickly resolve issues 24/7.
VoIP services should include unlimited domestic calling, SMS text messaging, an automated attendant and a desktop app. VoIP services also need to have unlimited international calling and team messaging capabilities. VoIP services should also offer toll-free numbers, international numbers, voicemail transcription, call recording, reports and analytics, video conferencing and call center features.
VoIP service providers let you make a call, send a message or schedule a video conference directly from a phone or computer. It doesn’t require any special hardware, just a special adapter.
“VoIP is advantageous because it eliminates the need for additional hardware and only requires an internet connection,” said Matthew Ramirez, a serial entrepreneur and investor. “It’s easy to use with a user-friendly interface and offers more features than traditional phone systems.”
Digging in the weeds on the technical side, when you make or receive a call, your voice is converted into a digital signal. This in turn is transmitted through the internet. Let’s say you’re calling a standard phone number. With VoIP, the signal changes to a phone signal before it reaches the receiving end.
“VoIP services aren’t universally identical, but there are quite a few of them,” said Mark Varnas, a tech consultant who has helped dozens of companies set up VoIP services in the past 20 years and founder of Red9 . “There are so many little things that can differ from company to company, like custom hold music, visual voicemail and hot desking.”
With the many options to pick up, deciding on the right VoIP for you can feel like a harrowing experience. So, how can you boil it down to the best option?
Here’s what to look for in a VoIP services for your business:
- Unlimited phone calls: This might include internal calls, domestic and long-distance calls and international calls.
- Business number: If you have a front-facing company presence and make a lot of incoming and outgoing calls, does the provider offer unique business numbers? Along the same lines, are toll-free numbers available?
- Incoming faxes: If your business gets a lot of virtual faxes (i.e., vendor applications or customer inquiries) then this could be important.
- Text messaging: Does it have the ability to send SMS and MMS messages over phones and other devices?
- Video conferencing: If your business prefers to chat over video or host seminars, workshops and conferences, the number of participants and maximum length of each meeting should be factored in.
- Integration of different features: How well do different modes of communication — calls, chats and video — work within the system and across different platforms, devices and hardware. “It’s important to avoid the mistake of not researching if a VoIP service is compatible with third-party software and hardware,” said Ramirez. “Some VoIP services may not be compatible with certain software and hardware, so it is essential to research compatibility before making a decision.”
- Integration with third-party apps: How many integrations does the VoIP service currently provide? Are these apps that are vital to your daily operations?
- Transcription features: If you need to keep recordings and documentation of different communications (sales calls, for instance), the ability to transcribe voicemails, meetings and calls is something to factor in.
- Included or add-on features: Which features are add-ons and require an extra cost, and which ones are included in the plan?
- Pricing: Is the price in line with your business budget for your communication needs? “Don’t go with the cheapest option, but don’t go with the most expensive one, either,” said Varnas. “Price is a poor indicator of quality when it comes to VoIP. It’s better to trial a few services before signing up for one long-term.”
- Support: Is customer support available via phone, email or chat? If so, are they available 24/7 or only during certain business hours?
- User reviews: Features advertised on a website is one thing, but how reliable is the connection and how accessible is customer support? User reviews on longstanding, trustworthy sites are a good place to look.
The cost of VoIP can vary according to a plan’s features, capabilities and the number of users. Each company has different tiers. Among the 10 companies on this list, the lowest plans start at $10.00 per month per user and prices go up to $27.99 per month.
There are four main types of VoIP services:
- Hosted VoIP: A hosted VoIP system means the system is maintained by the provider. You don’t need to do any installation, monitoring or upkeep internally. You are, however, tasked with providing needed phones and internet connection. The provider is responsible for supplying any other hardware or equipment.
- Cloud-Based VoIP: As the name implies, everything is done from the cloud. The internet is used to host everything and text messages, make calls and schedule video chats. In turn, you don’t need to worry about dealing with hardware. You can use your phones to communicate and use the VoIP services.
- UCaaS: Short for ‘unified communications as a service,’ UCaaS is cloud-based technology that incorporates audio, video and web conferencing, instant messaging, telephone capacity and mobility onto a unified platform.
- CPaaS: An acronym for ‘communications platform as a service,’ this is a cloud-based platform that integrates real-time, customized communications features into an existing app. It’s an easy way to be flexible and adaptable and cater to your ever-changing business needs.
You can think of SIP as one way of relaying VoIP. With VoIP, which stands for ‘voice over internet protocol,’ voice is sent through the internet. A cluster of technologies work in tandem to make this happen. SIP, which is short for ‘session initiation protocol,’ can set up or take down phone calls. It serves as the conduit and provides a direct connection to telephone systems. SIP is one way of setting up VoIP, and facilitates VoIP.
Yes, the technology is different. Using VoIP for your phone calls, messages and video meetings is different from Wi-Fi calling. Wi-Fi calls rely on the operator, while VoIP calls don’t. VoIP transfers packets of voice data over to the internet to a phone network. To establish a phone line, Wi-Fi calls sync up with your internet.
No, you don’t need a special phone to use VoIP service for your business. One of the main draws of going with a VoIP service is that you can use it on any phone and device. You don’t need to purchase special phones or hardware or even a special router.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
Jackie Lam has covered personal finance for nearly a decade. Her work has appeared in TIME, CNET, BuzzFeed, Salon.com, Forbes Advisor, and others. As an AFC® financial coach and educator, she is committed to helping self-employed creatives and artists with their money.
Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.
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ZDNET's editorial team writes on behalf of you, our reader. Our goal is to deliver the most accurate information and the most knowledgeable advice possible in order to help you make smarter buying decisions on tech gear and a wide array of products and services. Our editors thoroughly review and fact-check every article to ensure that our content meets the highest standards. If we have made an error or published misleading information, we will correct or clarify the article. If you see inaccuracies in our content, please report the mistake via this form .
The best business phone plans: Reliable 5G for work
When I started writing for ZDNet 15 years ago , mobile phones were being used by 74% of the US population, but only 14% of those people were using these basic phones to access the internet. The latest data shows that 97% of Americans own a mobile phone, with 85% of those being smartphones that access the internet multiple times a day.
Smartphones and wireless cellular services are now essential for businesses to compete in today's market and broad coverage is an expectation. After T-Mobile's recent acquisition of Sprint, the US market is dominated by Verizon, T-Mobile, and AT&T. Each of these carriers offers various plan options for businesses of all sizes.
5G continues to roll out across the US, but reliable LTE service is still essential to getting work done. The pricing for business service is competitive, and as someone who has been in the industry for decades, it is amazing to see the reasonable pricing for such fast service that reaches across the nation.
Verizon phone plans for businesses
Verizon Wireless has the most subscribers in the US and is popular with businesses. Three Business Unlimited plans make it easy to find the perfect option for your business. All three Business Unlimited plans from Verizon include unlimited talk, text, and data. Support for 5G, mobile hotspot, and tablet use differentiate the three plans. Pricing is also for five or more lines, targeted for business and not for family usage.
Business Unlimited Start
$30 per line per month.
While there are no limits on minutes, texts, or data, in times of congestion data may be slower with this Start plan. Nationwide 5G, low-band spectrum 5G, is supported with the Start plan and a compatible smartphone.
Tablet, smartwatch, and hotspot options are available for additional costs on the Business Unlimited Start plan. The price also includes $5 per month savings for paper-free billing and auto pay.
- Nationwide 5G coverage
- Able to add additional devices (watches, tablets) to the account
- No support for mmWave, high-band, 5G
- Data speeds slowed down during times of congestion
Business Unlimited Plus
$40 per line per month.
For $10 more per line per month, Verizon adds 100GB of premium network access, 5G UWB (mmWave) support, and unlimited mobile hotspot service. In addition, Verizon's Business Mobile Secure is included at no additional cost. This enhanced security bundle includes lookout mobile endpoint secure, mobile device management, Wi-Fi protection, and tech support.
- Nationwide 5G coverage, including mmWave spectrum
- Enhanced security bundle included
- Unlimited mobile hotspot service
- 100GB limit during high usage time periods
Business Unlimited Pro
$50 per line per month.
The highest level Verizon Business Unlimited plan provides twice the amount of premium network access, 120GB, along with 50% off on Business Unlimited Pro tablet plans.
This plan may be perfect for businesses using connected tablets out in the field and smartphones that are using data throughout the day away from Wi-Fi service.
- Nationwide 5G coverage with mmWave support
- 50% cost savings on tablet plans
- $50 price per line higher than other tiers
T-Mobile phone plans for businesses
After the purchase of Sprint, T-Mobile is now the second largest (in terms of subscriber count) carrier in the US. While T-Mobile has long been known for its consumer-friendly cellular plans, it also has one of the most extensive libraries of business offerings for small companies, large companies, and government agencies. Its new Business Unlimited plans are presented below, but other options require direct discussions between businesses and T-Mobile.
Business Unlimited Select
$25 to $60 per line per month.
Business Unlimited Select plans are designed for small business customers who need 1 to 12 lines of service. A one line plan is the most expensive, at $60 per month. Two lines are priced at $45 per line per month, four lines are $30 per line per month, and six or more lines are just $25 per line per month.
These plans include 5G network support, 5GB of high-speed mobile hotspot data, as well as unlimited calling/texting/data in Mexico and Canada.
- Very affordable small business plan
- Unlimited service in Mexico and Canada
- Unlimited streaming is limited to SD content
- Included data in Canada and Mexico is 128kbps speed
Business Unlimited Advanced
$30 to $70 per line per month.
If the employees of your small business travel by airplane and need Microsoft apps, then you should consider the T-Mobile Business Unlimited Advanced plan. This service plan includes 40GB of high-speed hotspot data, Microsoft 365, one hour of Gogo in-flight Wi-Fi, and 5GB of high-speed data in Canada and Mexico.
- Affordable per line price point
- Microsoft 365 productivity service included
- One hour of in-flight Wi-Fi service
- 40GB of high-speed hotspot
- 100GB of premium data
Business Unlimited Ultimate
$40 to $85 per line per month.
For small businesses that want it all at reasonable per line prices, the new Business Unlimited Ultimate plan is for you. In addition to the unlimited talk, text, and data (with 5G included) small businesses also get unlimited premium data, 100GB of mobile hotspot, and Microsoft 365.
Streaming content is provided with unlimited 4K UHD quality, WiFi on your flight is unlimited, and data in 210 countries is twice as fast (256kbps) as the other T-Mobile small business plans.
- Unlimited premium data
- Unlimited WiFi on your flight
- Microsoft 365 services included
- 5GB of high speed data in Canada and Mexico
AT&T phone plans for businesses
After T-Mobile added Sprint subscribers to its total subscriber base, AT&T dropped to third in total subscriber count. However, AT&T is also well established as an enterprise service provider with four enterprise options available to customers. AT&T also serves as the backbone for the FirstNet network optimized for first responders.
Unlimited Your Way for Business
Starting at $30 per month.
The Unlimited Your Way for Business plans allow up to 10 devices per plan group and are designed for small to medium-sized businesses. The more lines you add, up to 10 lines, the less expensive the starting price is for AT&T Business Unlimited Starter, Business Unlimited Performance, and Business Unlimited Elite. For 10 lines, the starting price is $30, $35, and $40 per line per month, respectively. For just a single line, these prices are $65, $75, and $85 per line per month, respectively.
Hotspot data allotments, priority data transmission, and higher definition streaming are features that improve as you move from the Starter tier to the Elite tier of service. Select the number of lines on the Unlimited Your Way website to view pricing for your company.
- Price per line decreases with additional lines
- Multiple tiers of service are offered
- Limited to 10 lines of service
- Priority data transmission restrictions
- Hotspot data limits
AT&T Mobility Select - Pooled
Starting at $35 per month.
Unlimited calls and text messages in the US, unlimited calls to Mexico and Canada, and unlimited texting from the US to more than 120 countries are included in the AT&T Mobility Select - Pooled plan service. Data is served up to each employee from a single shared pool for each business account.
Plans start at $35 per month, but potential customers need to contact AT&T to discuss specific details and plan pricing.
- Affordable plan pricing
- Unlimited calls to Mexico and Canada
- Shared pool requires management to allocate
AT&T Mobile Share Plus for Business
Starting at $50 per month.
The AT&T Mobile Share Plus for Business plan supports from one to 25 smartphone lines with various monthly data caps, ranging from 3GB to 120GB per phone. Pricing per phone starts at $50 per month for 3GB and goes up to $615 for one phone with 120GB of data.
Shareable data, rollover data, unlimited talk and text, mobile hotspot service, and international talk, text, and data are provided with these plans.
- Support for up to 25 lines of service
- Rollover data support
- Mobile hotspot service included
- Data caps allocated by service option
AT&T Business 4GB
Unlimited talk, text, and 4GB of data per line are provided with the AT&T Business 4GB plan. Hotspot data and standard mobile security services are also provided with the plan. Pricing for smartphones starts at $50 per month, but further pricing requires consultation with an AT&T representative.
AT&T Business 4GB is available for tablets for $20 per month and for wearables for $10 per month. AT&T advertises this plan as best for small businesses.
- Unlimited talk and text
- Controlled pricing per each phone
- Service options for tablets and wearables
- 4GB data limit per each line
MVNO options for businesses
While the three major carriers offer focused business plans, there are also a few MVNOs that offer attractive per line plans that may work well for small businesses. MVNOs (mobile virtual network operators) are companies that use establish wireless carrier infrastructure to provide no or minimal contract options for customers. The MVNOs do not openly advertise which wireless carrier infrastructure they are using, but as soon as you insert a SIM into your phone, you can see which carrier is connected to which MVNO. MVNOs are optimized for consumers looking for phone service with no contracts and prepaid options, but these same elements may help small businesses control costs and adjust to market demands.
US Mobile for business
$9 per line and $2 per gb per month.
Most MVNOs offer attractive per line prices with each account limited to five or six lines. US Mobile is one MVNO that actually provides shared data plans for companies of any size. Enter the number of lines you need and the amount of shared data to view your total monthly payment.
A couple of examples include 50 lines with 100GB of data for $674 per month or 30 lines with 50GB of data for $385 per month. We had the opportunity to test out the two available US Mobile SIM cards and found the service to be fast and reliable.
- Specific service offering for businesses
- Scalable to your business size and line needs
- Competitive $9 per line base fee
- Verizon and T-Mobile serve as network providers
- Data price per GB may be higher than unlimited plans
$30 per month per line.
Mint Mobile is one of the most popular MVNOs thanks in large part to advertising by one of its owners, Ryan Reynolds. While there are no specific business plans, three/six/twelve month plans for individual phones are available starting as low as $30 per month for unlimited talk, text, and data.
T-Mobile provides the network for Mint Mobile's service so you will need GSM handsets for the service.
- Unlimited talk, text, and data plan options
- Flexibility for less expensive data limit plans
- No specific business service plans
- Limited to T-Mobile coverage area
- Three available contract period options
Starting at $25 per line per month.
Cricket Wireless is an established MVNO, service provided by AT&T, that has retail stores around the country so you can get support and establish service in person if you desire. One to five lines can be setup for each account with measured data or unlimited data. Mobile hotspot data can also be added to each line.
4G LTE and 5G data is provided, along with international support, cloud storage, and more.
- Established, trusted MVNO
- Physical retail stores around the country
- Unlimited and measured data plan options
- No long term contract required
- Service coverage area limited to AT&T network
- Five line limit per account
What steps should a new business take to establish wireless service?
While this buying guide provides current pricing and service options from the three primary US wireless carriers and MVNOs, specific pricing for your business requires a conversation with the carrier to fully define your company needs, available service discounts, and contract lengths.
One of the first things to figure out is where you will need service geographically in the US as all three carriers have slightly different coverage maps. Your geographic operating area may remove one, or more, carriers from your viable candidate list.
The next step is to determine how many lines of service you will need and then the data needs of those lines. Calling and text messages are unlimited in all cases, but data speed and amount of data will drive your costs.
Most carriers also offer additional incentives and services, such as hotspot, in-flight coverage, Microsoft 365, and more. Make sure to account for the value of these incentives in your decision-making process.
What are the disadvantages of a MVNO?
Most MVNOs are focused on the consumer market so business plan offerings for more than six lines of service are rare. Pricing can be very competitive and with no contracts these MVNOs may be attractive to businesses just getting started that do not want to lock in long-term contracts.
Account management may require more time from businesses given the consumer focus of MVNOs. MVNOs are also subject to the infrastructure provided by the big three US carriers, but there are several established MVNOs with solid reputation and a record of high-quality service and support.
What is the best business phone plan?
We analyzed reliability, coverage, and price to compile a list of the best phone plans for your business which includes: Verizon, AT&T, and T-Mobile.
Does the choice of my smartphone model limit wireless service?
In the past, the US wireless market was split into GSM and CDMA service technologies with two carriers supporting each of these technologies. Modern smartphones support LTE and 5G service without CDMA technology your choice of smartphone is not as limited.
The most popular smartphones in the US, Apple iPhones and Samsung Galaxy phones, support all wireless technologies in the US wireless market so there are no limits on using these phones with any US carrier. If you purchase these phones directly from Samsung and Apple, then you can choose to purchase unlocked models.
Some phones are sold in a locked state so they can only be used on one specific carrier. This may be changing soon and there are processes to unlock your phone from your carrier if you decide to switch carriers. There used to be incentives for purchasing locked phones, but in today's world purchasing unlocked phones gives you the most flexibility for choosing your service provider.
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The 5 Best Business Cell Phone Plans of 2023
Data as of 12/7/22. Offers and availability may vary by location and are subject to change. *AutoPay Discount included: -$5/mo. per line. Plus taxes & fees.
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Business.org’s 5 best business cell phone plans
At&t: best full-featured plans.
Looking for a broad choice of bells and whistles? As a telecom behemoth, AT&T has plenty of cell phone features and packages to offer a business—around 20 plan variations, small to large. All plans include free US roaming, unlimited talk, and text messages, as well as unlimited texting outside of the country. Basic features like call forwarding, voicemail, caller ID, call waiting, and conference calling also come standard with all AT&T business cell phone plans, along with bring-your-own-phone support.
AT&T's business cell phone plans
Data as of 12/7/22. Offers and availability may vary by location and are subject to change.
Business Unlimited plan prices start at $35 a month per line, and there is a new perk where unlimited data is included in the unlimited talk and text plan. This means there is no need to worry about overages or data caps.
AT&T business plans can also accommodate up to 10 lines per account, and they come fully loaded with perks—like Stream Saver. This feature optimizes streaming video on your phone to 480p so you can watch webinars on-the-go without dealing with a blurry picture.
Each plan also includes a decent array of iOS and Android smartphone options and even a few good ol’ flip phones. A 15% military veteran discount can be applied to the Business Unlimited plans, as well as AT&T-owned DIRECTV services (because, again, telecom behemoth).
Users are eligible for a discount if they elect for autopay and paperless billing but this discount is only applied until after two pay periods. We don't know why the discount cannot be applied earlier in the billing process but we do find it frustrating.
T-Mobile: Best flexible plans
Not sure exactly what you’ll need in a mobile plan besides future adaptability? T-Mobile, the third-largest wireless service in the US, offers four Magenta® for Business plans, all packed with unique features that set T-Mobile apart from the rest. The German-owned company has also earned a reputation for stellar customer service and was the first to eliminate annual contracts (an idea that stuck—none of the plans reviewed on this page require contracts). In April 2018, the company announced its intention to merge with Sprint under the T-Mobile banner.
T-Mobile's business cell phone plans
Data as of 12/7/22. Offers and availability may vary by location and are subject to change. *While using AutoPay.
All of T-Mobile’s Business cell phone plans offer the same basic features:
Unlimited talk and text
Unlimited 5G and 4G LTE data on our network
- Unlimited mobile hotspot
- Scam Shield
Unlimited calling and texting to Mexico & Canada
Unlimited video streaming
In addition, all T-Mobile Business plans include DIGITS, which allows you to access up to five phone numbers on a single device. That means you could answer calls to your work number and your personal number on one device—no more packing two phones in your bag every day. DIGITS also lets you share your phone number across multiple devices, so you can answer on your phone, smartwatch, tablet, or computer.
T-Mobile users with a Business plan can also add the PlusUp add-on and get extra features, like Voicemail to Text, HD streaming, 20 GB of 4G LTE mobile hotspot data, unlimited in-flight Wi-Fi, caller ID, and double the data speed when roaming internationally.
Keep in mind, though, that T-Mobile’s Business plans are available only on plans with two to 13 lines. If you need more than 13 lines, you’ll need to sign up for the 13+ Plan ($285 per month for 13 lines, plus $25 per month for each additional line).
T-Mobile plans also allow bring-your-own-device convenience, or you can buy phones up front with a single payment (there are nearly 40 iOS and Android phones to choose from).
Now that T-Mobile and Sprint have been merged for almost six months, some significant changes have taken effect. T-Mobile’s website is now the only place businesses can sign up for Sprint or T-Mobile business phone accounts.
Sprint still has an active business website for previous users but all new plans will be sold by T-Mobile on its website.
Verizon: Best growing business plans
Serving over 150 million customers, Verizon isn’t just big, it’s BIG. Such a mobile mammoth might not seem like the obvious choice for a small business, but for what it lacks in a personalized customer service reputation, Verizon more than makes up for by offering every cell phone feature there is, as well as dominant US, and near-dominant global, coverage. Like McDonald’s and Marvel movies, Verizon is everywhere.
Verizon's business cell phone plans
Data as of 12/7/22. Offers and availability may vary by location and are subject to change. *With 4+ lines
While business owners can get business cell phone plans with limited data, we recommend choosing an unlimited plan if you have multiple employees (or do a lot of work via cell phone).
Verizon’s Business Unlimited cell phone plans are scalable from four employees up to and over 40. And with plans starting at just $40 per line, Verizon Business Unlimited plans are an attractive option whether you’re running a tiny company with no expansion plans, a medium-sized business with an eye toward growth, or a large enterprise with heavy cell phone requirements.
Verizon Beyond Unlimited plans also include unlimited mobile hotspot use, though your speeds are limited depending on your plan. Plus, you get unlimited calling and texting to Mexico and Canada—not to mention unlimited calling, texting, and data while in those countries. And naturally, you also get unlimited talk and text as part of your Beyond Unlimited package.
Verizon doesn’t skimp on device choices either. There are nearly 100 iOS and Android phones and tablets available—including the Verizon Jetpack, a mobile hotspot device that can connect 10 devices to its 4G LTE network and an additional five to 3G.
If your company requires truly “unlimited” cell phone service and scalability to grow and is in the position to pay for functionality with frills, Verizon Business Unlimited is the way to go. Bare-bones operations, however, might want to look elsewhere.
Each of our recommendations has its strengths and weaknesses. Sometimes the most difficult part about finding a phone system is determining exactly what you need and don't need. The best place to start is separating your needs between installing a new system, replacing a system or expanding system.
If you are having trouble sorting out exactly what your phone needs are, use this tool to help you understand what the best options are for your unique needs.
MintMobile: Most affordable plans
We are sure you’ve seen the commercials with Ryan Reynolds talking about this new phone carrier business with a fox logo called Mint Mobile. In fact, a lot of Mint customers were drawn to Mint because of Ryan Reynolds Hollywood looks, but that’s not the only thing Mint has to offer.
Mint is inexpensive and transparent, compared to other cell phone carriers with hidden fees and seemingly random regulations.
MintMobile's business cell phone plans
Data as of 12/7 /22 . Offers and availability may vary by location and are subject to change.
T hese are the prices for new customers and will last up to three months. After the third month, you are eligible to sign up for a 6- or 12-month contract on one of the tiered plans, all less than $35/mo/user, which is astronomically less than other providers.
MintMobile is no fuss, and you really do feel like you must be tricking the rest of the world with its pricing. The only issue is that MintMobile is fairly new, launched in 2015, coverage is not completely everywhere. There are still a couple of coverage gaps in the West, namely Utah, Nebraska, Idaho and Nevada. If you are east of the Rocky Mountains, you are good to go!
Teltik: Best perks plans
If you’re a strapped startup, New Jersey’s Teltik can get you up and running on the cheap. Teltik is a reseller service operating on T-Mobile’s 4G LTE network, meaning it can offer the reliability and reach of a giant provider at smaller-company prices. Teltik also has the advantage of being completely US-based, with 24/7 local customer service that’s not outsourced overseas.
Teltik's business cell phone plans
3 more (non-business) cell phone plans reviewed by business.org.
Teltik appears to have a dozen plans, but they’re mostly just variations of the essential plan that offers all the expected basics. Not coincidentally, the features mirror those of T-Mobile, as they’re on the same network.
The most basic plan starts at $20 a month and includes unlimited calling and texting, mobile hotspot service, and unlimited data—with a 2 GB cap on 4G LTE speeds (meaning your speed gets throttled to 128 Kbps if you use more than 2 GB of data in a month). From there, you can upgrade your plan to include more 4G LTE data and more mobile hotspot data. Upgraded plans cost anywhere from $30 to $40 per month, and they all include one cloud-phone VoIP line—perfect for small businesses looking to save on all their telecommunications needs.
One distinctly entertaining feature (pun intended) of Teltik’s business plans? You get unlimited media streaming from over 40 music services (including Spotify, Pandora, and Apple Music) and more than 100 video services (including YouTube, Netflix, and any other channel you can think of). That means you can stream as much TV as you want without it eating into your data. It’s almost as if Teltik doesn’t want you to get any work done.
Another thing you need to know: Teltik doesn’t sell phones. Instead, the company operates on a strict bring-your-own-device basis. Any unlocked phone will work with its network, as will any T-Mobile device, of course. However, you will have to spend $10 plus shipping and handling to buy a new SIM card for each of your devices (unless they’ve already got brand-new, unused T-Mobile SIM cards).
Assess your company’s current cell phone usage, and projected future needs, before diving into any plan. What looks like a great deal could turn out to be more than you actually need—or you may have initially underestimated your business’s cell phone requirements. Also, if your company has both cell phone and regular office phone needs, check into bundling. The larger telecom providers offer both types of phone coverage, and bundling services is an easy way to save money in the long run.
Don’t want to carry around separate phones for work and personal calls? With the right VoIP service, you don’t have to. Check out our favorite business VoIP providers to see which ones offer on-the-go business phone capabilities.
Business cell phone plan FAQs
If you have several employees working outside of the office on a regular basis, desk-bound phones obviously aren’t going to work for them. Some may be only calling and texting while others will be checking email, using GPS navigation, and accessing the internet for work, but a cell phone is a must for employees in the field.
If you’re a one-person operation accountable to only yourself, you could get by with a personal cell plan. Keeping track of multiple employees’ hours, data, and providers, however, would be an extra headache you don’t need. For streamlining and collaboration purposes, a business cell phone plan would be the easier route.
Most of the plans we’ve reviewed here offer unlimited data—domestically, at least—so hitting the data ceiling won’t likely be an issue. But if you want to forecast how much data your business uses every month, providers make data plan estimators available on their websites. Or you could use a third-party calculator app.
BYOD stands for bring your own device . Another common term is BYOP for bring your own phone . These can mean that employees are using their personal phones, tablets, or laptops on their own carrier plans for work or that they’ve put those devices on the company’s plan. The upside? Less expensive than buying devices. The downside? Extra security concerns.
In the annoying absence of Wi-Fi, you can use a cell phone signal to connect a wireless device to the internet by switching on the mobile hotspot option and simply treating it like a Wi-Fi router. For multiple device connections, a dedicated hotspot (such as Verizon’s Jetpack) can provide a faster, and more stable, connection.
Business owners weigh in
To find the best business cell phone options, we considered pricing plans, customer support, and data limits. We also looked at the variety of contracts and whether these plans were flexible with discounts.
At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.
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Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.
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Best business phone service of 2023
Phone services for small business and enterprises
- The best business phone services in 2023 in full
- Best overall
- Best budget
- Best with CRM
Best for conferencing
- Best established
Best for small business
Best for sole traders, how we test.
The best business phone service makes it simple and easy to manage a cost-effective and software-based business phone system.
The best business phone services of 2023 in full 1. Best overall 2. Best budget 3. Best with CRM 5. Best for conferencing 6. Best established 7. Best for small business 8. Best for sole traders 9. FAQs 10. How we test
Business phone services have changed radically over the past decade. VoIP services have now replaced the desk covered with a bank of phones.
The result is that employees can use their mobile devices on the go, using nothing more than an app to join with the corporation's network, whether for chat, conferencing, or even to manage online fax services .
Set up is usually easy and very simple, as it requires little more than signing up to a digital service and then accessing it once paid for. While there may be some small configuration settings that need to be done, this can take only a few minutes. Once completed you now have a full service phone system that can scale up to as many employees as you need to cover.
Different services tiers are commonly offered, with cheaper plans offering essential features, with more expensive plans offering additional features if required.
Costs are usually based on a user basis rather than business turn-over, and though many phone service companies offer clear and flat-rate pricing, some providers will seek to provide a personalized quote instead which can often cost more while allowing for extra options not normally available.
Here then are the best business phone services, with our main choices featured, with additional options to consider following.
We've also featured the best IP phones .
Reader Offer: Save up to 33% on annual plans RingCentral is a strong solution for organizing all business communications, from voice calls to team chat. It has a wide range of software integration and strong security.
Preferred partner ( What does this mean? )
Reader Offer: Free quote Ooma Office is an easy-to-use VoIP service that can work well for many small businesses. With simple setup and flexible, helpful customer service, it's a top-rated business phone system.
Reader Offer: Free quote 8x8 X Series is an excellent VoIP solution for small businesses, with multiple methods of communication combined into one efficient yet feature-rich workspace. It has an excellent security system and low starting prices.
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The best business phone services in 2023 in full:
Best overall business phone service, 1. ringcentral mvp.
Our expert review:
Reasons to buy
RingCentral MVP promotes itself as an all-in-one solution for all business sizes, with a unified communications strategy that means plenty of integration options, from Google to Microsoft , Oracle to Amazon , and Zendesk to Salesforce .
The most basic tier offers call management and phone system administration, as well as phone rental options for conference phones and even desks.
However, it's the pricing tiers above this where RingCentral MVP really comes into its own with a comprehensive set of features that should be integral to any modern phone service.
RingCentral also provides Unified Communications as a Service (UCaaS ) as well as Contact Center as a Service (CCaaS) , meaning that it can provide the enterprise experience for even small businesses.
On top of this, RingCentral can also deliver a Communications Platform as a Service (CPaaS) , which means access to a developer network which allows you to use APIs to truly customize and integrate your phone system with other software you use.
Overall, though, which the cheaper plan probably delivers enough to satisfy the smallest businesses, it will be mid-sized and larger that will probably get the most from the incredible wealth of features that RingCentral MVP can provide.
Pricing starts with the Essentials plan at around $33 / £30 / AU$50 per month when billed annually.
Read our full RingCentral Office review .
Best budget business phone service
2. ooma office, reasons to avoid.
Ooma Office is a business phone service which aims to deliver a big business phone experience to small businesses. Ooma might not have all the features found with rival services, but it presents itself as a solution for smaller firms with tighter budgets, and is positioned very well in this respect.
However, don’t get the idea that this is a barebones business phone service offering – in fact Ooma Office gives you all the core features you would expect, plus some more advanced functions like a virtual receptionist that allows for calls to be automatically directed to the right department.
Subscribers also benefit from hold and transfer music, and Ooma provides mobile apps for iOS and Android, so you can set up capabilities such as call forwarding, enabling calls to be sent from your desk phone to your mobile when you’re out and about. That said, some of the online feedback about the mobile apps isn’t great, so bear that in mind.
Generally speaking, though, Ooma gives you a lot of functionality for a relatively modest outlay, with the exception of CRM integrations.
To find out what suits your needs best you need to contact Ooma for a quote.
Read our full Ooma Office review .
Best business phone service with CRM solution
Aircall is another cloud-hosted business phone service solution, which can be set up with just a few clicks. This then provides your business with a complete communications center solution for calls, video, and messaging from the web, desktop, or mobile.
Aircall is also very easy to set up, and includes a wide range of CRM , helpdesk , and productivity functions to both support your phone service, as well as improve how your sales and support teams handle calls, not least in terms of transferring them as well as approaching customers. And, as expected, there's an analytics suite to help gauge efficiency and track KPIs in workflows and look for ways to improve them.
Because Aircall looks beyond providing just a business phone system and instead toward unified communications and CRM, it can provide better support for sales and support teams. There are also a large number of integrations available, not least for SalesForce, Zendesk, Hubspot, Zoho, Freshdesk, and Slack.
Aircall offers three plans: Essentials, Professional and Custom. The cheapest Essentials plan costs $30 / £25 / AU$45 per user per month when billed annually.
Read our full Aircall review .
Dialpad is especially known for its video and audio-conferencing software, Uberconference. Dialpad Talk is their VoIP system.
The basic tier offers single sign-on which is missing from a lot of other providers. The basic plan includes integrations such as Google Workspace (formerly G Suite) and Microsoft 365.
The pricing structure for Dialpad makes it much more accessible for businesses of any size, which is welcome as other providers favor enterprises over small businesses. Users can also try the service with a 14-day free trial. The annual subscriptions offer discounted monthly rates making it even more cost efficient.
Pricing is a lot more small business-friendly than some of the above, with even the most basic plan including toll free numbers, unlimited calling in US/Canada, call forwarding, call controls, HD video calling, call waiting, voicemail greeting, unlimited, SMS, MMS, group texting US and Canada.
Read our full Dialpad review .
Best established business phone service
5. micloud connect.
Mitel offers a cloud-based business VoIP phone system in the form of MiCloud Connect, which aims to provide a comprehensive voice, collaboration, and contact center solution for business.
The platform itself operates using Google Cloud, which means that it satisfies HIPAA and SOC 2 compliance, Key benefits include the Mitel hosted PBX phone systems which can run on mobile devices on the go, plug and play service functionality, as well as a simple interface that allows for one-click management of systems.
MiCloud Connect also includes audio and video conferencing , web sharing, VPN , group chat, contact center, and includes a number of integration options.
The basic pricing tier includes PBX, conferencing, and collaboration tools. The next level up adds call recording and integration features on top. Note that advertised pricing is for 50-100 users and that a smaller number of users will likely be charged at a higher rate.
However, for those with teams you can mix and match different plan types for different users, therefore ensuring you're only paying for the level of service required from each for greater cost efficiency.
Read our full MiCloud Connect review .
8x8 offers a cloud-based platform that provides different service tiers for providing calls, conferencing, collaboration, and a call center.
For small businesses, the cheapest tier available is the 8x8 Express, which is available with a 30-day free trial. There are a lot of basic but essential features present, and this level of plan could be a great way for a very small business or start-up to try out the phone service without much outlay.
After that tier plans offer unlimited calling to fourteen countries, mobile apps, team messaging, HD video conferencing with screen sharing, call recording, transcripted voicemails, analytics, Single Sign On (SSO), as well as integration with Salesforce, Zendesk, and NetSuite.
More expensive tiers for large businesses and enterprises add unlimited calling to more countries, supervisor analytics, call quality reporting, and an operator switchboard.
Compared to other providers 8x8 can work out as an especially cost-effective phone service for small businesses.
Read our full 8x8 X Series review .
Phone.com aims to be an affordable business VoIP service for small businesses, and with base plan that is cheaper than most competitors. The trade-off is that the plan offers limited voice minutes and text message volumes that may not be adequate for most business use.
On the bright side, even on this bare plan there are premium features included, such as voicemail to email, call blocking and call queuing. It is also indicated that the service is HIPAA compliant to meet the standards of privacy for healthcare-related businesses.
Perhaps the more realistic options for most businesses are the more expensive options which increase the limits on phone minutes and texts.
What Phone.com does really well is make full-featured cloud-based business phone services really accessible to the smallest of businesses, so whether you're a one-person LLC or sole trading you can still access features normally available only to enterprises.
Read our full Phone.com review .
Other business phone services to consider
Why you can trust TechRadar We spend hours testing every product or service we review, so you can be sure you’re buying the best. Find out more about how we test.
Whether you're looking for a more traditional PBX phone system or a VoIP phone system, there are a lot of different providers out there. Which one is best for you will depend on your own needs and business size. While we've featured five providers above, there are a huge number of alternatives. Here we'll take a quicker look at another five.
Avaya is another of the big names in unified communications, and along with Mitel has established itself as a leading specialist player for business telecommunications. Even so, the Avaya OneCloud caters for the full range of business sizes, from small to enterprise, so don't be put off thinking big names means big costs. Cloud-based VoIP is already an established offering from Avaya, with many different options available to suit your business.
FluentStream is another cloud-based VoIP provider that offers a multi-faceted UCaaS platform and a good number of integrations. There's a decent list of features even for the basic plan, with increasing levels of service options up to contact center level. As expected, mobile use is treated as standard rather than an option, with apps available for Android and iOS.
Skype is possibly an option easily overlooked, but had already established itself as a leading provider of VoIP even before it was purchased by Microsoft. Now it offers all the cloud and Office integrations you'd expect from the powerhouse parent company. So long as you're happy to keep your calls online and use mobile phones or tablets for calls and conferencing, this could be the cheapest option of all the ones listed here.
Spitfire is an impressive VoIP provider without being a standout. The fact the company owns and maintains its own SIP trunking infrastructure is a huge plus, as is their porting agreement with major telecommunications providers in the UK. And international porting makes it possible to communicate seamlessly with customers and clients from across the world.
Which business phone service is best for you?
When deciding which of the best business phone services to use, first consider what actual needs you have. For example, someone simply wanting to talk to a handful of people on a casual basis may find a cheaper option is the most cost-effective while providing all of the necessary tools that would be required. However, if you're planning to use a business phone service for professional or business purposes, especially with a large number of people and on a regular basis, then you will probably want to look to the higher-end options for the more advanced tools that are included.
To test for the best business phone service we searched for a range of popular options as well as took recommendations from people we know who run their own business phone service. We then tried each platform to see how user-friendly each was, as well as determine what range of tools and advanced options were available. Pricing also came into account when determining our best list.
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- Best Small Business Phone Systems of 2023
Small businesses need reliable phone systems, especially when day-to-day operations rely heavily on this form of communication. We looked into all the features that matter most when it comes to small business phone systems, including Voice over Internet Protocol (VoIP) technology, which all the companies on our list offer. Our top three best small business phone system providers are Intermedia, Nextiva, and Dialpad.
Top Rated Phone Systems for Small Business
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Business Phone Services Considered
Table of Contents
What Is a Small Business Phone System?
- Rating Details
How Much Do Small Business Phone Systems Cost?
If you’re a small business owner, you know that your day is full of juggling tasks and that you just don’t have time to add communication issues to your to-do list. The best small business phone systems make communication reliable and affordable so you can focus on running your business. They also rely on VoIP phone technology, allowing you to use an internet connection for your entire business phone system. VoIP phone systems have no special equipment to buy or staff to manage them. You simply need to download a mobile or desktop app to have a fully-featured phone system at your fingertips.
Many VoIP providers have also advanced business phone systems considerably, allowing you to add unified communications features like video conference, team chat, and voicemail-to-email. We’ve researched and rated the plans, pricing, and features of the best small business phone systems to develop a list you can trust choosing from.
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Best Small Business Phone Systems in Detail
Not every good business phone system is appropriate for a small company. We sorted through our rating of the Best Business Phone Systems of 2023 to find ones that are affordable, flexible, and easy to use with a mobile device for businesses with fewer than 50 employees. Follow the links in the companies' summaries to find our full reviews, and read our advice on how to choose the best plan for your small business.
Most integrations available with basic plan
Some features require separate add-ons
Video conferencing maxes out at 200 participants
Intermedia Unite is a unified communications (UC) phone system with integrated chat, video, file sharing, and contact center capabilities. Its two plans offer a variety of add-on features, such as resource lines and toll-free numbers. Along with unlimited calling to U.S. and Canadian numbers, all subscriptions include an auto-attendant, call recording, cloud storage, team messaging, and video conferencing. Also, all users can schedule video meetings from Slack, Google Workspace (formerly G-Suite), and Microsoft products, like Outlook and Teams.
Advanced features and additional capacity come with Intermedia Unite Pro and Enterprise packages. For example, Unite Pro adds a virtual assistant to your video meetings, which provides AI-driven transcripts and insights. Enterprise users get 200 GB of cloud storage, Microsoft Exchange email, and video conferencing with up to 200 participants.
Read more in our Intermedia review .
Round-the-clock customer support
Monthly, no-contract plans available
Integrates with existing contact and CRM tools
Some features aren't available on the base plan
Expensive per-user cost for the base plan
Best price requires a three-year commitment
Nextiva’s UC platform offers unlimited calling within the U.S. and Canada, an auto-attendant, virtual faxing, and U.S.-based local and toll-free numbers. Regardless of the plan tier, users can host and record 45-minute video meetings with 250 participants. The subscriptions include 1,500 to 12,500 toll-free minutes, team messaging, and voicemail transcriptions. Plus, Nextiva provides several payment options with lower rates for one, two, or three-year contracts and annual billing.
Professional and Enterprise integrate with customer relationship management (CRM) programs , such as SugarCRM , Salesforce , and HubSpot . Higher-tier plans also include one to three professionally recorded greetings. Nextiva recently rolled out NextivaOne, a desktop application that puts your calls, texts, and emails into a single inbox.
Read more in our Nextiva review .
App integrations available at entry-level
AI-powered call analysis and transcription
APIs provide additional user management functionality
14-day trial period is short
24/7 support not available with all plans
Dialpad Pro and Enterprise plans support U.S.-based and international offices, offering unlimited calling within your country, the U.S., and Canada. The entry-tier version (Standard) provides a robust feature set with tools typically found on higher-tier VoIP packages yet costs $15 per user per month with annual billing. The advanced capabilities include built-in AI and analytics, such as live speech coaching and automated post-call summaries. All subscriptions have multilevel auto-attendants, file sharing, and unlimited texting.
Dialpad users, regardless of the plan, can host five-hour video meetings with 10 attendees. However, Pro and Enterprise users gain international texting, integrations, and local number support in more than 70 countries.
Read more in our Dialpad review .
Base-level Express plan is very inexpensive
Compliant with various privacy standards including HIPAA
Many plans include unlimited international calling
24/7 support is limited to higher plan tiers
Basic plan doesn’t offer as many features as other companies
8x8 stands out with plans catering to very small businesses and global corporations. The competitively-priced 8x8 Express plan supports companies with five or fewer users and includes unlimited calling in the U.S. and Canada, an auto-attendant, video conferencing, and team messaging. 8x8 X-Series offers unlimited calling to 14 or 48 countries, depending on your subscription. These versions work for teams of any size, and you can customize plans to only pay for features each individual needs.
Along with call management features, X-Series business communications plans support 500 video conference participants and live streaming to YouTube. Interactive meeting features like breakout rooms and instant polls keep remote users connected, while CRM integrations can help track customer interactions.
Read more in our 8x8 review .
Designed for office, remote, and mobile employees
Unlimited number of users can be added
Offers secure global PBX services
Essentials plan limited to 20 users
No video conferencing capabilities on the base plan
No 24/7 technical support on the base plan
RingCentral offers three plan options: Core, Advanced, and Ultra. The Core plan begins at $20 per user per month with an annual contract.
All plan levels include:
- Unlimited domestic calling
- Interactive Voice Response (IVR)
- Single sign-on
- SMS and MMS
- Analytics for IT administrators
The platform also offers many collaboration tools for remote and hybrid teams, with different capabilities on each plan. For example, users can host 24-hour video meetings with breakout rooms and whiteboard sessions. Upper-tier versions integrate with hundreds of applications, including HubSpot and Salesforce .
Read more in our RingCentral review .
Business phone service providers typically charge a per-user fee that can be paid monthly or annually. Base subscriptions range from $10 to $30 per user per month. The flat price per person generally includes a business telephone number, unlimited or metered calling, and other communication features.
Some other important pricing factors you may encounter include:
- Tiered pricing models: They provide more features on higher-priced plans.
- Cloud-based tools: These tools generally don’t require onsite servers and, therefore, typically don’t require an installation fee.
- Hardware: VoIP phones and headsets are optional purchases that depend on your business’s specific needs.
Add-on features: Features such as international calling packages, increased conferencing capacity, and integrations are offered by many companies. For businesses that can benefit from these services, the added cost will be worthwhile, and businesses with simpler requirements can forgo them and save on costs.
What Should I Look For in a Small Business Phone System?
Small businesses can face narrower profit margins, especially in their early years of operation, and trimming costs wherever possible can be essential to success. “Cost is a huge factor for [these companies] in their operations," explains Supradeep Dutta , a Rutgers School of Business–Camden assistant professor and an expert in technology and entrepreneurship. "VoIP is one thing to reduce the cost of communications.”
Cloud VoIP phone solutions are an excellent option for mitigating costs associated with traditional phone services. For example, VoIP means that small companies can not only skip traditional office phones but can also explore remote work options for staff that doesn’t rely on a physical office. With the help of the apps associated with these services, employees can use their own mobile phones or computers to make or receive calls, send texts, or hop onto a video conference call – all from a business number.
Aside from the cost, two of the most important factors to look at in a small business phone system are:
- Ease-of-Use: The simpler and more intuitive the service and associated apps are, the better. Making a phone call or sending a text should be straightforward, and your VoIP service should never make you feel like you need to hire a switchboard operator just to reach the right person. Look for a service that offers features that will make your life easier. Depending on your business, this can mean generating automatic transcripts, offering custom hold music, ensuring reliable voicemail functionality, or employing spam protection.
- Flexibility: For a small business, flexibility is key. The ability for your VoIP service to scale with your business should be clear from the start with easy-to-add lines and transparent pricing. Don’t forget to consider integrations, either. The compatibility of your VoIP service to integrate with a CMS or help desk system is something to note before committing to a provider.
Every small business is unique, and a single feature can’t address every concern. It can be helpful to make a list of the features you need or want most from a phone system, beyond cost. While it might not be at the forefront of your mind, be sure to think about the security needs of your business and if the VoIP provider you’re considering can meet them. And, don’t forget to look into the provider’s customer support.
It’s easy not to think about problems until you have one, but the last thing any business needs is to encounter a technical issue and be unable to reach the right person who can help. Some providers offer 24/7 support and others are more limited. Make sure this availability will work for your operating hours.
Compare the Best Business Phone Systems for Small Business of 2023
How do i choose the best small business phone system.
Buying a business phone service can be an overwhelming process. The choices are vast and you have much to consider, from system types and features to cost and even your customers’ expectations.
The number of providers selling these services has grown as well. “Right now there are over 500 companies selling hosted phone systems in the United States,” says Phillip Sherman, president of Telecom Advisors Group , which helps companies find phone solutions to fit their business needs. “A new one or two pops up just about every day.”
Here are some factors you should consider when making a purchase.
- Number of users: How many employees will be using your phone system? Most providers charge a monthly fee per user, so costs can really add up with the more users you have. A provider that charges a flat monthly fee regardless of the number of users might be a better choice if you’re just looking for a basic office phone system.
- Video conferencing: Does your company rely heavily on video conferencing with clients or other employees? If so, you’ll want to choose a provider that offers video meetings in its most affordable base plans. Those that offer it in their top-tier plans will drive up your monthly cost per user.
- Automated features: If you expect a high volume of calls, you’ll want a provider that offers many automated call management features. These can include auto-attendant, voicemail-to-email or voicemail-to-text, and hold music. To keep your customers from waiting, you may also want to look into plans that include intelligent call routing, forwarding, flip, and transferring.
- Remote employees: If you manage many remote employees, you may also need a service with strong team communication tools. These can include an easy-to-use mobile app, team and one-on-one messaging, file sharing, and video conferencing. Just make sure you choose a cloud-based rather than on-premise PBX system that will support these remote features.
- Customer service: If your business relies heavily on your phone system, make sure you choose a business with round-the-clock support. The last thing you’ll want to be doing when your phone system is down is submitting a support ticket. Instead, you’ll want to speak to a real person who can help you solve your problem fast.
How Do Small Business Phone Systems Work?
Business phone systems connect your employees to one another as well as to those outside of your business, like clients or customers. This can happen through voice conversation or through other tools like text or instant messaging. While there are different types of business phone services you can utilize, the ultimate goal should be to streamline communications to help your business run more efficiently.
Types of Business Phone Systems
Business phone systems can be broken down into a few different types. Each has its own benefits, but some are better suited to the needs of a small business. Larger companies may still lean toward the traditional private business exchange (PBX) system or IP-enabled PBX, which are dedicated systems to a specific company and generally based on-premise. On the other hand, small businesses most commonly use cloud-based VoIP systems.
Benefits of Cloud-Based VoIP Systems
When it comes to cloud-based VoIP systems, there are many benefits businesses can reap:
Cost savings: A cloud-based telephone service is not a dedicated system. Instead, it's hosted in the cloud and managed by the service provider. This allows the business phone service to be provided at a lower cost on a subscription basis.
Hardware-free: These types of phone systems don’t require hardware and can instead be accessed through mobile and desktop apps.
Dynamic updates: The hardware-free infrastructure allows the business phone provider to keep the service updated at all times and provides your company with access to UCaaS features, such as messaging tools, video conferencing, and third-party integrations.
Simplified implementation: The relative simplicity of implementing a cloud-based VoIP system makes it the ideal option for most small businesses.
Saves resources: VoIP systems give your company access to all the modern-day business phone system features, without the upfront cost of having to build out a dedicated on-premise system or the required staff to maintain it.
Mobility and flexibility: These systems give your employees the flexibility needed to work from anywhere since they can access your business communications network from an app on their cell phone.
To learn more about the ins and outs of VoIP systems, read our guide, What Is VoIP ?
Choosing the Right Business Phone Service for Your Needs
While cloud-based business phone services have many benefits, this type of system may not meet the specific needs of your company. Consider your options and how your business interacts with a phone system to complete your work in order to make a choice that best fits the way your company is run. Think about your business’s size, budget, and the most important features that you require from your business phone service.
Why Do Small Businesses Need a Business Phone System?
All businesses, small and large, benefit from better communication. For small businesses, however, there may be more specific needs that have to be addressed in finding the right phone system, like tighter budgets. That is why researching business phone systems are so imperative for small businesses.
As a small business owner, you will want to find a system that is the best balance of price and the features you need. To learn more, read our guide on How to Buy a Business Phone .
Cloud-based business phone systems work on your existing devices, such as cell phones and computers. No additional hardware is required. Mobile and desktop apps replace traditional analog telephones, and features like virtual faxing happen in the cloud. However, computer users may want a VoIP headset for call privacy and quality reasons.
If you want to use your current analog devices, including fax machines and conference phones, with VoIP, you will need an analog telephone adaptor (ATA). In addition, many small business phone providers support IP phones, which resemble analog desk phones but connect to the internet instead of a landline.
Yes, you can install your business phone system yourself. The best business phone systems for small businesses are commonly cloud-based telephony services. These services are quick and easy to set up because they do not require hardware to be configured on-site.
Cloud-based VoIP phone systems take a do-it-yourself approach. The system is hosted off-site and managed by the business phone system provider. So you don’t need to go through a complicated process to get your phone system up and running. Simply sign up for an account and pick out your phone numbers. Download the provider’s mobile and desktop apps to gain access to the business phone system. You will still want to set up typical features like voicemail and call routing, but once the app is installed, you are all set to make business phone calls.
You may also opt for IP desktop phones. These act as a more traditional business phone option and might be a good choice for small businesses with an office where employees spend most of their time. IP desktop phones are generally easy to set up with plug-and-play options or some minor configuring.
The average small business will generally require up to 10 phone lines. However, this number can be impacted by a wide range of factors, number of employees being foremost among them. If you are the sole proprietor of your business, you may only need a single. If you are a 50-person operation that fields calls daily across multiple locations and departments, you may require significantly more lines.
Some additional factors to think about include:
- Number of both internal and external calls that occur in your business
- How many employees actually require a line or separate number
- How many locations, offices, and departments will require phone services
- What your budget can comfortably accommodate
- What hardware or equipment will be required to support your operations
Yes, internet-based phone services support employees regardless of where they work. VoIP lets you route or forward calls to employee-owned and company-owned devices. Your teams can answer and transfer calls, even if your physical office is closed. Home users typically have access to the same features provided for in-house staff, including virtual faxing, unlimited calling, and voicemail.
Moreover, many small business phone systems offer collaboration tools, allowing remote and on-site teams to interact in real-time through video and group messaging. These features may include file sharing, whiteboards, screen sharing, and breakout rooms.
Small business phone services often have security and privacy certifications that can help protect your company when communicating with clients over the phone. Secure networks, encryption, and modern internet protocols are among the industry standards for business phone providers. Although most VoIP providers encrypt phone calls, cloud-based tools do have vulnerabilities.
The type of information shared over the phone depends on your small business's industry. While some companies in sensitive information fields need to be more cognizant of these risks, all businesses should consider the inherent risk of using an internet-based business phone system. Robust password management policies, security software, and regular software and hardware updates help keep your business phone system secure.
Companies that handle personal health information (PHI) may need additional security measures, including working with a HIPAA-compliant VoIP vendor. These certifications are generally published on the phone provider's website for your reference. Be sure to find a provider that offers the necessary credentials for the regulations in your industry.
- Best Business Phone Systems of 2023
- Best VoIP Business Phone Systems of 2023
- What Is VoIP?
- How to Buy a Business Phone System
- Nextiva vs. RingCentral Business Phone Systems
- MagicJack vs. Ooma Business Phone Systems
- Ooma vs. Vonage Business Phone Systems
- Ringcentral vs. Zoom Business Phone Systems
Business Phone Systems
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U.S. News 360 Reviews takes an unbiased approach to our recommendations. When you use our links to buy products, we may earn a commission but that in no way affects our editorial independence.
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Compare the Best Business Phone Systems
Our top recommendation for most people is Nextiva or RingCentral . Both services offer unmatched functionality and a suite of features to satisfy nearly every business communication need.
To find the best business phone services, the Quick Sprout research team spent four weeks analyzing 544 customer-facing reviews across 23 criteria points. We analyzed customer sentiment, pinpointed recurring themes, evaluated the quality of customer support, and assessed the ease of use, functionality, integrations, and pricing for each brand.
In the first round of research, we singled out 34 potential top brands . The next round whittled the number down to 29 , and finally identified the top 14 business phone systems fitting our criteria.
The Top 14 Best Business Phone Systems
Each of these 14 brands stood out in the highly competitive business communications market. We review each one below after explaining our discovery process.
- Nextiva — Best for most
- RingCentral — Best for hybrid or remote work
- Vonage — Best for dispersed teams
- Ooma — Best for small businesses needing an easy setup
- Aircall – Best for brands with a consistently high call volume
- GoTo Connect – Best for getting a wealth of features in a basic plan
- Grasshopper – Best for solopreneurs and microbusinesses
- Talkroute – Best for small teams on-the-go
- 8×8 – Best for affordable, high-security calling services
- Avaya – Best for using toll-free numbers
- Dialpad – Best for gathering real-time analytics
- Google Voice – Best for brands already using google products
- Net2Phone – Best for international business calls
- Webex Calling – Best for SMBs who need enterprise features
For most of our readers, the best business phone system is Nextiva or RingCentral , thanks to their versatile range of features and excellent customer support.
Vonage is feature-rich but comes at a high price point. And Ooma is a solid choice if you have a small business and want an easy setup.
How We Evaluate the Best Business Phone Services
Selecting the best business phone service for your business shouldn’t cause stress. So we made it as straightforward for you as possible. In this section, you’ll learn about the system we used to research and evaluate each brand. If you want to skip to the reviews below, feel free to jump to the product reviews .
How We Qualify the Best Business Phone Systems for Consideration
We picked through the internet with a fine-toothed comb and gathered a list of 34 brands offering business phone services:
11Sight, 1-VoIP, 3CX, 8×8, 800.com, Aircall, Avaya, CallHippo, Channels, CloudTalk, Dialpad, eVoice, Freshdesk, Genesys Cloud, Google Voice, GoTo Connect, Grasshopper, Microsoft Teams, Mitel, net2phone, Nextiva, Nice CXone, Ooma, OpenPhone, Phone.com, RingCentral, Talkdesk, Talkroute, Twilio, Vonage, Webex Calling, Windstream, Zoho Voice, Zoom.
We first eliminated any brand that only offered call center services rather than actual business phone services. That removed six options, leaving 29 for us to dig deeper into.
How We Narrowed the List of Qualified Business Phone Services
Plenty of these brands didn’t meet our standards and ended up cut from our list. We used six core criteria points to figure out which ones didn’t best serve our readers’ needs for a business phone system.
We eliminated 55% of the 29 brands that didn’t meet these criteria:
- AI assistance: In this day and age, there’s no reason not to leverage AI assistance in everything from taking notes, recording and summarizing calls, and setting up ideal workflows.
- Manage calls seamlessly: A business phone service can’t really call itself that if it doesn’t effortlessly handle calls. We got rid of businesses that lacked the core features of a solid business phone system—call forwarding, transferring, call blocking, auto attendant, call parking, and do not disturb—and starred brands that came with all these features and more.
- Location flexibility: Few of us work solely from one device these days, which is why it’s crucial for any phone business service to offer flexibility. Only the brands with dedicated, well-reviewed desktop and mobile apps made our list.
- Reliability: Glitches happen, and you can never completely get rid of them. But the top business phone services on our list promise—and deliver—99.99% uptime and tools to quickly analyze and fix issues that do arise.
- All-in-one UCaaS solution: Countless businesses operate from remote or hybrid workplaces, which means a complete UCaaS system that offers conference calls, video conferencing, text messaging, faxing, team messaging, file sharing, and phone services is ideal.
- Calling without limits: Without unlimited calling, business phone services can get unreasonably expensive very quickly. Before choosing services for our top list, we evaluated how much calling each service offered, including whether it came with international calling.
We also eliminated brands if they:
- Came with little to no social proof, such as reviews and sentiment
- Had poor user satisfaction
- Only provided solutions for developers
- Proved to be niche solutions for sales teams only
- Were significantly more expensive than comparable brands
Using this process, we cut 15 brands . Here’s a list of the brands that are qualified but not recommended, plus a breakdown of why they didn’t make the list.
1-VoIP : This is a basic, dependable business phone software, but it’s lacking essential features like AI assistance, call flipping, call tracking, training tools, and outbound calling features.
Twilio : A dynamic CPaaS tool, Twilio uses APIs to embed voice into established apps, making it a niche product that requires a developer to install. It’s perfect for certain businesses but doesn’t make sense for our list.
11Sight : This service hands power over to potential customers, allowing them to hop on a video call to get the information they need to convert. While useful in some situations, this function is too niche for our list.
Zoom : While Zoom excels at hosting webinars and video conferences, its phone services are prohibitively expensive and it doesn’t offer outbound calling.
Microsoft Teams : If you’re already immersed in the Microsoft ecosystem, Teams is a decent choice. But it lacks unlimited minutes and the common features that make a business phone system stand out.
Channels : This niche service lets your target audience connect with you via your website or social media channels. A neat idea, but like 11Sight, it’s too niche for our list.
eVoice : A basic tool that offers virtual phone numbers for existing lines, eVoice is too limited for our top list of complete business phone services.
Phone.com : A decent, middle-of-the-road offering, Phone.com can’t compare to the more feature-rich systems on our top list.
Zoho Voice : Since it only integrates well with other Zoho products, Zoho Voice only makes sense for those fully entrenched in the Zoho ecosystem—and even then, Voice is a bit too clunky and slow for our list.
800.com : While this tool does well at forwarding toll-free calls to existing lines, that’s about all it can do.
OpenPhone : A virtual phone number provider with a few extra features, OpenPhone lacks the full suite of tools that would qualify it for this list.
Mitel : This service does pretty well as an office phone tool, but it lacks the features of a full-service business phone provider.
CloudTalk : A solid offering for a cloud-based call center or small-scale phone system, CloudTalk is missing core UCaaS features.
3CX : Even though 3CX offers many of the features we’re looking for, it’s missing something vital: customer support. If you encounter any issues with this software, all you can do is consult blogs and support groups—unless you want to pay a fee to submit a support ticket.
CallHippo : A competent choice for basic phone services, CallHippo’s price is too high for a service with no UCaaS features.
The Top Business Phone Services Left Standing
After eliminating 58.8% of all the brands we considered, 14 outstanding business phone services remained. Our top choices for most users are Nextiva and RingCentral .
Match Your Scenario to the Right Business Phone Service
It can be difficult to figure out which business phone system brand will fit your company’s needs best. A busy medical practice has different needs than, say, a florist or mobile delivery service.
You may already know exactly what you need from a business phone service, but just in case you don’t, we have some resources for you. Here are five common scenarios that tend to drive the decision-making process when it comes to finding a business phone solution.
Use this list to help guide your decision.
- You need a complete phone system for team messaging, texting, video conferencing, and fax
- You need to manage a high volume of calls
- You don’t want to be tied to your desk
- You want to make calls primarily from your desk
- You want to add a business line to your cell phone
You Need a Complete Phone System for Team Messaging, Texting, Video Conferencing, and Fax
Best Option: Nextiva
Finding an all-in-one business phone system at a sensible price can be challenging—but not with Nextiva. This brand offers a complete UCaaS solution in its Professional and Enterprise plans, which don’t cost much more than its Essential plan.
You’ll get all the UCaaS features you need, including:
- Unlimited conference calling
- Unlimited video conferencing
- Team messaging
- Private group messaging
- Unlimited fax
- Mobile SMS/MMS
- Screen sharing
- Auto attendant
- Professionally recorded greetings
Nextiva’s Professional plan supports video conferencing with up to 250 participants. But you can have unlimited participants on video conferences if you sign up for the Enterprise package.
Overall, Nextiva is one of the most feature-packed phone systems on the market, and its quality is top-notch.
Another great choice: RingCentral
Like Nextiva, RingCentral offers a complete UCaaS package that works well for a variety of businesses. On the service’s higher—but still affordable—tiers, you’ll get video calls with up to 200 participants, SMS, fax, document sharing, team messaging, and SMS.
Plus, RingCentral recently launched a webinar service as part of its services, making it an even more well-rounded offering.
This service lets you invite up to 10,000 participants and 100 panelists, gives you analytics on engagement, quality, and performance, connects to popular apps, and is really easy to use. You also get Q&A and polling functionality and customizable registrations.
If you need a complete UCaaS system, consider these points when you’re making a decision:
- UCaaS features: does the brand offer complete UCaaS features for your hybrid or remote office?
- Voicemail features: is anything beyond standard voicemail capabilities offered, such as voicemail to email transcriptions and recordings?
- AI features: do you get an automated attendant, call summaries, workflow recommendations, and other key AI features?
- Ease of admin: the last thing you want is a business phone system that’s a nightmare to set up—how user-friendly is system setup and management?
You Need to Manage a High Volume of Calls
If you constantly need to field thousands of outbound and inbound calls, Nextiva can easily handle your business’s call volume. With call management, tracking, and analytics, Nextiva helps you connect with clients or customers and identify weak spots in your team’s performance.
Nextiva also comes with advanced IVR and conversational AI: when callers phone your number, AI will route them to the appropriate person or department based on their answer.
Another great choice: AirCall
If you need call recording, warm transfer, IVR, plus skills and time-based routing, Aircall is an excellent call center tool for you. Aircall’s analytics aren’t as strong as Nextiva’s, but it offers quality call recording and extended recording storage, which we love.
The advanced IVR feature on its own is enough to accommodate most high-volume businesses. This makes it much easier to manage inbound calls and ensure everyone is routed to the right person or department—without having to speak to a live receptionist. Aircall even has an advanced parallel calling feature that allows a single agent to speak with two people simultaneously.
In terms of volume for outbound calling, you can take advantage of Aircall’s power dialer on higher-tiered plans. Aircall seamlessly integrates with CRM tools, as well, so you can have all of your customer information in one place while you’re reaching out to leads.
If you’re looking for a business phone service specifically for its call center capabilities, pay attention to:
- Call management: can you easily forward, transfer, or block calls? What about IVR, auto attendants, and specialized call routing for non-business hours?
- Analytics: does the software provide basic customer and agent analytics?
- Call transcription and recording: can you record calls and transcribe them for training purposes?
- Training features: does the service come with listen-in, whisper, and barge features to aid in training new agents?
- AI features: how many processes does AI take care of so that you can focus on other things?
- Customization: is white labeling possible with the brand? What about using custom music when a customer is on hold?
- Quality and reliability: what steps does the brand take to uphold the highest possible call reliability and quality?
- Unlimited calling: how many calls are included in the plan tiers? If unlimited isn’t the answer, how much do extra calls cost?
- Outbound calling features: does the software come with outbound calling features like click-to-call, power dialing, and scheduled callbacks?
- Security and compliance: a particularly important question to consider for healthcare, government, and legal entities is security and compliance, such as HIPAA compliance. How does the brand stack up when it comes to privacy regulations, data management, encryption, and security certifications?
- Call tracking: can you find out where phone calls are coming from, helping you segment your audience and build relevant marketing campaigns?
You Don’t Want To Be Tied to Your Desk
Best Option: RingCentral
Not only is RingCentral a complete business phone service, but it also offers full-featured apps that allow you to work on the go. Whatever you do on your desktop with RingCentral, you can do it on your phone or tablet using the brand’s app.
This makes it convenient to work remotely some or all of the time. Even better, customers love RingCentral’s apps—it comes highly rated on both Google Play and the App Store.
Beyond voice and text, RingCentral’s mobile app supports team chat and video conferencing. You can even use it to send and receive online faxes from your smartphone.
You’re getting the same high-quality experience whether you’re working from an office desktop, home laptop, or smartphone at the coffee shop.
Another great choice: Google Voice
If you already use Google Workspace—and even if you don’t—Google Voice is a solid alternative to RingCentral. It doesn’t come with as many features, but it’s very affordable and includes analytics, call management, call tracking, and even international calls at its highest pricing tier—which is still just $30 per month.
Google Voice makes it easy for you to work from anywhere. You can make and receive calls, send texts, and access your voicemail from your mobile device, laptop, or supported deskphone. So whether you’re at the office, at home, or working on the go, Google Voice is always with you.
If you’re looking for a business phone service that gives you everything you need when you’re away from your desk, keep these points in mind:
- Unlimited calling: how many calls can you make each month, and how much do extra calls cost?
- Call management: does the service offer automated attendants and menus, forwarding, blocking, transferring, specialized routing, and other key management features?
- Desktop and mobile apps: can you seamlessly switch between desktop and mobile app-based calls?
- Phone system types: what type of phone system is the service using—VoIP, KSU, on-premise PBX, IP-enabled PBX, or something else?
You Want To Make Calls Primarily From Your Desk
Best Option: Ooma
Compatible with both IP and analog phones that you may already have—or with a phone purchased directly from Ooma—this service offers standout reliability, particularly when you’re calling from your desk.
Whether you need a dedicated desk phone or want to use a desktop app as a softphone, Ooma’s got you covered. We love how long the feature list is for its basic plan.
The Ooma Office Essentials plan includes a free mobile app, virtual receptionist, multi-ring functionality, ring groups, call park, music on hold, call forwarding, virtual fax, call logs, and more. In fact, Ooma offers 50+ features all designed especially for small businesses.
Another great choice: Avaya
If you’re committed to using a desk phone, Avaya gives you options. Choose from a variety of IP and conference phones, as well as headsets to make calling hands-free for you and your team.
The cool part about Avaya is that they also make it easy to deploy desk phone setups across multiple locations.
For example, let’s say you rely on remote workers to power your contact center. But you still want them to have a high-quality workstation setup. Avaya’s cloud setup makes this possible, and the system is still compatible with a wide range of hardware designed to stay in one place. So your work-from-home reps can have access to the same technology and desk phones as your in-office staff.
If you’re looking for a reliable landline, here’s what to look out for:
- Ease of admin: how complicated is it to set up and manage the business phone system?
- Quality and reliability: does the provider have tools in place to optimize uptime, internet connection, and proactive monitoring and avoid static, echo, packet loss, and dropped calls?
- Phone system type: what type of phone system does the service offer—VoIP, on-premise PBX, IP-enabled PBX, virtual phone systems, or KSU?
- Implementation options: does the service utilize cloud-based, on-premise, or hybrid options—or allow you to choose one yourself?
- Voicemail: what voicemail and voicemail transcription capabilities does the service offer?
You Want To Add a Business Line to Your Cell Phone
Best Option: Talkroute
Whether you need to add a toll-free, 800, local, or vanity number to your mobile phone in the U.S. or Canada, Talkroute has you covered. Talkroute is the solution when you want your business to be run no matter where you are. You can make and receive calls from any desktop, browser, or smartphone. All you need to do is download an app.
This business phone service has super-reliable service wherever your cell phone has service, its mobile apps are well-rated on the App Store and Google Play.
Once you download the Talkroute app, it’s easy to configure your settings to ensure that your business calls don’t overtake your personal life—even though you’re managing everything from one phone.
Talkroute lets you customize your hours of operation, set up a custom greeting, and add a menu with different extension options. So if it’s after hours or you just don’t want to be disturbed with a business call, you won’t be bothered.
Another great option: Grasshopper
If you’re a solopreneur or run a small business, Grasshopper is an ideal choice to consider. Add a dedicated business line to your personal cell and enjoy features like IVR, custom call routing, warm transfers, call blocking, and 24/7 customer support.
Overall, Grasshopper just makes this really seamless. It’s always obvious if an incoming call is on your personal line or business line, even though you’re managing everything from a single device.
We also like that Grasshopper lets you set up custom schedules. This works great for those of you who like to have a work-life balance. If you don’t want your business line to ring on a Sunday afternoon while you’re relaxing with the family, then it won’t. But you can continue using your phone for personal use without any interruptions.
If you want to add a business line to your phone, pay attention to:
- Desktop and mobile apps: can you easily transition between your mobile phone and your desktop computer if needed—even in the middle of a call?
- Quality and reliability: how does the system handle—or better yet, prevent—dropped calls, echo, static, packet loss, latency, and other common problems?
- Types of phone numbers available: when you create a new number for your business line, can you pick from a variety of number types at little to no extra cost?
- Voicemail features: does the service offer voicemail transcription, ample voicemail recording space, and other key voicemail features?
The Best Business Phone System Reviews
Now that we’ve covered why we cut the brands we did and walked you through five key scenarios, it’s time to highlight the good stuff. In this section, you’ll discover why we loved these 13 best business phone services. No matter what you need a business phone system for, we’re confident that you’ll find an excellent match in the list below.
Nextiva – Best for Most
Nextiva is perfect for any brand that needs a full-service UCaaS package offering those six core UCaaS functions:
- Unified messaging
- Enterprise telephony
- Audio, video, and web conferencing
- Instant messaging and personal + team presence
- Mobility and communications-powered business processes
With Nextiva, you’ll enjoy some of these UCaaS features in the Essentials plan and all of them in the Professional and Enterprise tiers. Its suite of features doesn’t make Nextiva difficult to learn, though: users report that this business phone system is surprisingly simple to set up and manage.
A downside to Nextiva is that its call recording, video conference recording, and voicemail transcription are only available in the Enterprise plan. Many competitors include these features in mid-tier plans, so it’s disappointing that Nextiva doesn’t.
Nextiva’s mobile apps are another drawback—users report frustrating, clunky functionality there. But this won’t be an issue if you don’t plan to use the apps in the first place.
What Makes Nextiva Great
We love that Nextiva offers a range of features that go beyond UCaaS, enriching both user and customer experience. With Nextiva, you’ll get:
- AI features, including advanced interactive voice response (IVR) with conversational AI
- Robust call management tools that include multi-level auto attendants, caller ID, and call blocking, forwarding, transferring, and routing
- Call analytics tools that assess performance, conversion rates, and calls you get from Google Ads
- Easy implementation with options to port an existing number to Nextiva, rent or purchase a Nextiva phone, or bring your own device to the service
And with 24/7 customer support that reviewers praise for being patient, friendly, and helpful, Nextiva makes it easy for users to solve any problems that arise.
There are three different plans to choose from:
- Essential – Starts at $17.95 per month
- Professional – Starts at $21.95 per month
- Enterprise – Starts at $31.95 per month
The rates above are based on annual pricing with 100 or more users. The exact price will vary depending on how many people are on your team—with different pricing for teams of 1-4 users, 5-19 users, and 20-99 users.
Month-to-month pricing is also an option for a slightly higher monthly fee. But it’s a solid option if you’re not ready to commit for the full year just yet.
Get in touch with Nextiva today to get started with your business phone system. Find out more about Nextiva’s pricing plans here .
RingCentral – Best for Hybrid or Remote Work
Do you need a business phone system that works well whether you’re at your desk or working remotely? RingCentral delivers on both fronts. Unlike some of our other top choices, RingCentral’s iOS and Android apps come with high ratings, with users complimenting the apps’ functionality.
RingCentral features many UCaaS tools—particularly in its middle and top plan tiers—including:
- SMS messaging
- Unlimited faxing
- Video calls with up to 200 participants
- Document sharing
One drawback to RingCentral is its lack of adequate customer support. While you get 24/7 phone and live chat support with the three higher tiers, our Open Source Intelligence analysis found that many customers reported hours-long wait times, a frustrating amount of transfers, and dropped calls.
What Makes RingCentral Great
Customer service aside, RingCentral is easy to set up, and customers rave about its user-friendliness. In addition to the UCaaS features it offers, you get real-time call tracking, super-easy admin management via the Admin Portal, over 300 integrations, and versatile call recording tools.
Other noteworthy highlights of RingCentral include:
- Built-in analytics
- Interactive voice response (IVR)
- Flip calls between softphones, desk phones, and mobile in one click
- International calling capabilities
- Contact center solutions
- Incoming caller ID
- Call queues
- Breakout rooms
- Collaborative notes and whiteboarding
And whatever you can do on your desktop, you can do it on your tablet or phone using RingCentral’s well-rated app. That’s what makes this business phone service so useful for teams that are always on the go.
Here’s a closer look at the different plans and pricing options offered by RingCentral:
- Core – $20 per user per month billed annually
- Advanced – $25 per user per month billed annually
- Ultra – $35 per user per month billed annually
You’ll save up to 33% with an annual contract, but RingCentral does offer month-to-month billing. These rates start at $30, $35, and $45 per user per month—depending on the plan you select.
You can test any of RingCentral’s plans with a 14-day free trial .
Vonage — Best for Dispersed Teams
Vonage is a global calling solution that connects you with colleagues across every channel you want to use, no matter where people are in the world. Vonage’s combination of desktop and mobile apps, plus traditional desk phones and video conferencing lets you communicate and collaborate anytime from anywhere.
Vonage doesn’t shirk in keeping lines of communication open with customers, either. It keeps you connected across the most popular social channels and messaging systems, including:
- Facebook Messenger
- Facebook Live
The one area where Vonage gets slightly less competitive is with price. You’ll pay a bit more for all its feature-rich functionality than you will with some of the other options on this list. Those looking for the least expensive way to keep their business connected may find Vonage to be a bit much.
What Makes Vonage Great
If Vonage’s price tag isn’t a dealbreaker, you’ll get a lot of bang for your buck. Vonage’s AI Studio offers drag-and-drop simplicity to build custom workflows that help you automate responses for both voice and message channels. It also offers robust APIs for voice, video, SMS, and ID verification, so you can get the most out of your phone system.
Other Vonage features that make it a winner on our list are:
- Ecommerce support
- An impressive 99.9% uptime
- Dropped connection solutions
- Call automation sequences
- Call monitoring
- Simplified integrations
Vonage’s business communications plans start at $19.99 per line per month for the Mobile Plan. This gets you desktop and mobile apps, unlimited calls, SMS, and team messaging. For $29.99 per line per month, you can jump up to the Premium Plan to add IP deskphones and a CRM integration. There’s also an Advanced Plan that includes all the bells and whistles for $39.99 per line per month.
Ooma – Best for Small Businesses Needing an Easy Setup
If the thought of setting up a business phone system for your small business makes you feel like sinking back into bed and calling it a day, Ooma’s got you covered. In just three simple steps, you can:
- Configure user accounts
- Decide how to handle incoming calls using the virtual assistant and incoming call menu
- Set your business hours
- Customize additional features, such as adding a toll-free number, number porting, and conference calling
If any questions pop up during the setup process, just call Ooma’s reliable customer support. The phone lines are open 24/7/365, and users praise the agents’ friendliness, helpfulness, and promptness.
If you’re looking for AI features, integration capabilities, outbound calling features, and FBI-level security, you’ll have to look elsewhere. Ooma focuses on ease of use, effortless admin management, and top-notch customer service over these features.
What Makes Ooma Great
Even though Ooma doesn’t have some of the more advanced features present in other business phone services, it works incredibly well for small businesses. The features it does offer are easy to use and essential to small-scale operations.
With Ooma, you’ll get tools like:
- Music on hold
- Transfer music
- Call forwarding
- Virtual receptionist
- Ring groups
- Extension dialing
- Extension monitoring
- Virtual fax
- Enhanced call blocking
- Call recording
- Voicemail transcription
This is just a short list of Ooma’s features. We love how Ooma helps you pay attention to the smallest details when it comes to using a business phone system without making them a pain to use. Put them all together and you get a professional solution that’ll keep you, your team, and your customers happy.
Ooma offers three different pricing plans to choose from, each with 50+ features and an easy setup. Plans begin at $19.95 per user per month, but even the top-tier plan is affordable at just $29.95 a month. Reviewers report saving hundreds of dollars per month after switching to Ooma from a different business phone service.
Aircall – Best for Brands With a Consistently High Call Volume
Some brands are slammed with a constant barrage of client and customer calls. If you’re one of them, Aircall can help you manage that high call volume without losing your mind—or losing customers.
Here are the Aircall features you can use to manage a heavy call volume:
- Business hours: set unique business hours for each number on your plan
- Interactive Voice Response (IVR): easily guide callers through the menu and some solutions without lifting a finger
- Warm transfer: send a call + an informational note to another agent on your team
- Call routing: set up a preferred routing sequence based on who’s available or appropriately skilled to handle certain types of calls
- Queue callback: give callers on hold the option to be called back as soon as possible rather than stay on hold
- Parallel calls: speak with two people at once or easily pause a call to gather more info that’ll guide your response
- Block unwanted calls: curate a list of blocked numbers to avoid letting spam interrupt your valuable calls
VoIP solutions can come with imperfect sound quality, and our research found that Aircall is no different. While about half of the user reviews we studied expressed satisfaction with call quality, the other half noted issues with connection, particularly on international calls, and poor sound quality.
What Makes Aircall Great
When you’re working to effectively manage a high call volume, it’s important to keep track of your team’s performance and pinpoint areas you can improve. Aircall makes this easy with its analytics features.
The basic plan covers, well, the basics: average call time, wait time, response time, and missed call rate. The two higher tiers offer more advanced analytics, including a live feed with real-time call activity and tools to jump in and coach the agent when needed.
You’ll also get detailed data related to activity, productivity, and customer service information, along with advanced filters for sorting and analyzing data.
Higher-tiered plans also come with features like:
- Queued callbacks
- Call monitoring and whispering
- Power dialer
- Dedicated account manager
- Personalized onboarding sessions
- Unlimited access to call recordings
Aircall also offers smooth integrations, particularly with CRM software. The ecommerce integrations let you see a customer’s purchases, reviews, and other relevant data before you answer their call. This excellent tool helps ecommerce brands provide informed customer support.
Pricing begins at $30 a month billed annually for the Essentials plan. Larger teams can benefit from the full-featured Professional plan, which begins at $50 per month, or contact Aircall for a custom solution. Test Aircall out with a seven-day free trial of its Essentials or Professional plan.
GoTo Connect – Best for Getting a Wealth of Features in a Basic Plan
If you want a base plan for your small team that doesn’t skimp on features, GoTo Connect has your back. Even though we love what it offers in its mid- and top-tier plans, we really admire how many features are packed into its Basic plan.
When you purchase the basic plan, you get:
- Local, toll-free, or vanity numbers to choose from
- Up to 20 users
- Video meetings for up to 4 participants
- Basic integrations
- Multi-device calling capabilities
- Existing number porting
- Unlimited extensions
- Instant text response
- Audio conferencing
- 40-minute meetings
Plus, you’ll get one auto attendant recorded greeting, one ring group, and one call queue—all on the Basic plan.
Unfortunately, GoTo Connect doesn’t have any AI features. Its Basic plan is also a bit more expensive than comparable business phone services. And while it’s easy for smaller businesses to set GoTo Connect up on either a hosted PBX or all-cloud VoIP system, the implementation gets more complicated the bigger your company is.
What Makes GoTo Connect Great
We love that GoTo Connect doesn’t skimp on the features that even smaller brands may need to successfully use a business phone service.
GoTo Connect offers a lot of core phone system features at a reasonable price—a value that’s especially evident in the Basic plan. But we’d be remiss if we didn’t mention the excellent toll-free and international call capabilities on the next plan up.
If you choose a Standard plan for just $5 more per month, you get free calling to 50 countries and 1,000 free toll-free minutes, plus even more convenient business phone features.
There are two different plans to choose from—Basic and Standard. To start with GoTo’s comprehensive Basic plan , you’ll pay $24 a month billed annually or $27 billed monthly for up to ten users. The actual rate per user varies based on your team size, as GoTo Connect offers volume discounts with each tier.
Grasshopper – Best for Solopreneurs and Microbusinesses
If you’re a sole proprietor or the leader of a tiny team and you don’t need nearly as many bells and whistles as bigger brands, Grasshopper will meet your needs. Instead of compelling you to purchase phones or set up complicated software, Grasshopper is a call forwarding service.
This business phone service lets you create a business phone number that, when called, pushes calls to your personal phone—without revealing your actual phone number to clients.
Fair warning though, Grasshopper is a lean tool. It doesn’t record or transcribe calls. It doesn’t offer tons of integrations. It doesn’t have outbound calling features. And if you’re based in Alaska or Hawaii, Grasshopper considers this offshore/international calling and will charge you a $500 deposit.
What Makes Grasshopper Great
Setting up Grasshopper takes just minutes, and once you’re all set up, the service is easy to use. With Grasshopper, you can:
- Route calls according to your personal or business schedule
- Block calls
- Supervised or blind live transfers
- A third-party auto attendant integration with Ruby
You can also upload your own music to use when a customer is on hold and record custom greetings that only apply to your business phone number’s voicemail inbox. Grasshopper comes with basic analytics, as well as unlimited users, call minutes, and text messages.
Plans start at $14 per month when billed annually. You can test out this service with a seven-day free trial .
Talkroute – Best for Small Teams On-the-Go
If you’re looking for a simple and affordable business phone solution that’s as mobile as you are, Talkroute has you covered. It’s a straightforward way to turn your existing smartphone or computer into a virtual phone system.
With plans starting at just $19 per month, it’s an affordable way to get lots of great UCaaS features into your phone system. In addition to basic calling features, Talkroute supports texting, video meetings, call forwarding, multi-digit extensions, and more.
Unlike some of the other options on our list, Talkroute, unfortunately, doesn’t have any AI features. It also lacks call tracking, international calling, and advanced integrations. But for smaller teams, these shortcomings probably won’t be a dealbreaker.
What Makes Talkroute Great
Every Talkroute plan comes with unlimited calling. For making and receiving calls on the go, it’s an easy way to set up a business phone system without having to get any new hardware. Plus, at just $5 per additional user per month, it’s super affordable to add team members to your plan.
Talkroute lets you hit the ground running with all of the essentials in its entry-level plan. But if you want to get a little bit more out of your phone system, you can access features like call recording and keep your data forever. This is great for those of you who are constantly working remotely and taking calls around down. The ability to access calls later on can be really helpful.
Talkroute provides all of the call management features you’d expect in a business phone system. For such an affordable option, the software is even HIPAA-compliant at the entry level.
Some of the more advanced features available in the higher plan tiers include:
- Company directories
- Multi-digit extensions
- Call recordings
- Detailed call paths
Setting up your Talkroute phone system is a breeze. The system works by using your cell service or landline through a public switched telephone network. Just set up a 30 to 60-minute setup call with a Talkroute expert if this sounds too complicated for you to do on your own.
Talkroute Basic starts at $19 per month plus $5 per additional user. At $39 per month, Talkroute Plus delivers the most value. But if you want to unlock all of Talkroute’s features, the Pro package, at $59 per month, has everything you need to succeed. Try any Talkroute plan for free with a seven-day free trial .
8×8 – Best for Affordable, High-Security Calling Services
Sometimes, less truly is more. If you’re not looking for dozens of features and scads of tools but you still want a simple, secure, and affordable business phone system, 8×8 is for you.
It seems like every week, there’s a new data leak or security breach to worry about. With 8×8, you can rest assured that the brand takes security very seriously, implementing fraud detection, secure coding via participation in the Open Web Application Security Project (OWASP), secure endpoint provisioning, multiple layers of encryption, and protection of consumer proprietary network information (CPNI).
This makes 8×8 ideal for businesses in the healthcare, finance, education, and government sectors. One drawback to 8×8 is that some of its features—including call transcription, scheduled callbacks, and auto-dialing—are only available on its call center plan.
What Makes 8×8 Great
8×8 takes pride in its commitment to security. The brand holds an impressive amount of third-party compliance and security certifications, including but not limited to:
- Health Insurance Portability and Accountability Act (HIPAA) compliance
- Federal Information Security Management Act (FISMA) compliance
- General Data Protection Regulation (GDPR) compliance
- U.K. Cyber Essentials Plus accreditation
- U.S./EU Privacy Shield certification
- ISO 27001:2013 and ISO 9001 certification
- Authority to Operate (ATO) by Her Majesty’s Government
That’s right, even the Queen of England appears to approve of 8×8. All joking aside, 8×8’s commitment to global security makes it a great choice for any brand that operates both inside and outside of the United States. And in addition to all of these security measures, 8×8 participates in an annual, third-party review to assess and improve on its already-strong security standards.
8×8 pricing information is not available online. To get started, reach out to the 8×8 sales team for a free quote .
Avaya – Best for Using Toll-free Numbers
Avaya is our top choice for businesses that need toll-free numbers and plenty of toll-free minutes. While most business phone services don’t include free toll-free minutes in their plan tiers, Avaya does.
Each plan includes a toll-free number. Depending on the plan you choose, you’ll also get 100, 1,000, 2,500, or 10,000 included toll-free minutes.
One thing we found frustrating about Avaya, though, is that in order to purchase a plan, you must contact a sales representative. There’s no easy way to select, pay for, and start using a plan as there is with many other business phone services. It’s also difficult to nail down an exact price for the features you’re looking for—without first contacting an agent, that is.
What Makes Avaya Great
Despite its clunky pricing and purchasing system, Avaya is easy to set up and use. It has strong AI features, reliable service, quality audio and video, unlimited business SMS, team messaging, document sharing, and automatic voicemail transcriptions.
It also makes using toll-free calls easy even on a global scale. If you need to enable toll-free international calls, pay a one-time fee of $25 to add an international toll-free number for $14.99 a month.
You can also add extra toll-free, local, or vanity numbers to your plan for just $4.99 per user per month.
Another unique standout of Avaya is its versatile setup options. You can use it to set up a hybrid cloud contact center or all-in-one communication suite. Avaya even has business phone solutions for meeting spaces and collaboration.
Avaya’s pricing begins at $20 per user per month with an annual subscription. There are two other plans to choose from—starting at $25 and $35 per user per month, respectively. But you’ll need to speak with an agent to fully understand what features you’re getting for what price.
Dialpad – Best for Gathering Real-Time Analytics
Even though it can be nerve-wracking to receive feedback from customers, analyzing and acting on feedback is one of the best ways to improve a company. Many business phone services come with great analytics, but Dialpad takes it up a notch.
With Dialpad, you can utilize powerful AI to gain real-time insights that help you improve phone calls as you make them. Dialpad also has additional AI functionality for contact centers, sales coaching, and more.
Our research also found that its advanced AI doesn’t complicate things: Dialpad is easy to set up and use. Its mobile apps are well-rated and continuously updated. It offers UCaaS features like SMS, team messaging, limited video conferencing, audio-only chat rooms, and file sharing.
We do wish Dialpad also came with call tracking and international calling bundles, but it doesn’t. It also costs more to use features like in-queue callback capability and power dialing.
What Makes Dialpad Great
Dialpad’s AI features are among the most impressive we’ve seen. With Dialpad, you get:
- Real-time meeting transcription
- Live call sentiment analysis
- Automated post-call summaries
- Keyword tracking during phone calls
- Real-time assist cards with custom notes set to appear when trigger words are spoken
- Agent performance reports
- Live speech coaching
The cool part about these features is that they actually deliver real value to phone reps, as opposed to just being nice-to-haves. These immediate analytics can help team members improve during a call—or help experienced agents turn a negative customer experience into a positive one in real time.
Just because it’s an AI powerhouse doesn’t mean Dialpad’s got a bloated price. Plans begin at an affordable $15 a month when billed annually, and you get all its AI features from the get-go. Try Dialpad free for 14 days .
Google Voice – Best for Brands Already Using Google Products
Let’s face it, plenty of us are fully entrenched in the Google ecosystem and would really love to use a fully integrated business phone service. And that’s what Google Voice is for. It’s extremely easy to add Google Voice to your suite of existing Google tools.
Google is the leading search engine in the world, which means you’re getting top-notch analytic insights when you use Google Voice. You’ll get important information regarding acquisition calling, Google Ads reports, locations, call tracking, and a call log.
What Google Voice doesn’t have is transcription, integration with non-Google apps, robust customer support, faxing, file sharing, native team messaging, or bulk messaging. Of course, you can use Google Docs and Google Chat to share files and message your team, but it’s not a seamless, all-in-one package.
What Makes Google Voice Great
In addition to being easy to add to your Google Workspace, Google Voice is simple to use. It offers free calling to the U.S. from any country, as well as free calling to Canada from the U.S. The Premier plan also offers unlimited international calling to a list of approved countries.
Google Voice comes with key call management tools, including customizable routing options, custom call forwarding, call transferring, ring groups, an automated attendant, and call blocking.
If you work remotely, use the well-rated Google Voice app—available on both Google Play and the App Store—to stay on task.
It costs $10 per month to add Google Voice’s base plan to an existing Google Workspace account. The highest plan tier—Premier—costs $30 per month. See our complete guide to Google Voice for more information.
Net2Phone – Best for International Business Calls
When it comes to business phone services for international calls, Net2Phone blows all competition out of the water. Sure, many other brands offer international bundles at an extra price, or selected international calling at higher-tier plans. But with Net2Phone, you get unlimited calling to 40 countries—no hidden fees.
Best of all, Net2Phone offers this outstanding feature even in its lowest plan tier. This makes Net2Phone an unbeatably affordable option for a business that needs to make frequent international calls.
One downside is that Net2Phone doesn’t come with any standout AI features for its business phone services.
What Makes Net2Phone Great
Offering unlimited calling to 40 countries isn’t Net2Phone’s only strength in relation to international calls. You can also get virtual phone numbers in over 50 countries and 300 cities. Net2Phone has offices in the US, Canada, Argentina, the UK, Brazil, Mexico, Israel, Hong Kong, Spain, and Colombia to support its global services.
Even with a reach like this, Net2Phone doesn’t sacrifice security. It’s HIPAA compatible. It’s also Payment Card Industry Data Security Standard (PCIDSS) and Service Organization Control 2 (SOC2) compliant. Plus, Net2Phone uses STIR/SHAKEN protocols to limit spam and spoofing.
To help ensure that emergency situations are taken care of when 911 is called from a Net2Phone number, the service is compliant with Kari’s Law, the Ray Baum Act, and e911, all of which help ensure that locations are shared during an emergency call.
Each of Net2Phone’s plans is surprisingly inexpensive. Pricing begins at $18.99 per month for 25-99 users, and the highest tier costs just $22.99 per month. Businesses with over 100 users can contact the Net2Phone sales team for a custom quote.
Webex Calling – Best for SMBs Who Need Enterprise Features
Small and medium-sized businesses, or SMBs, often need enterprise features in a business phone system. However, SMBs may not have the IT team—or budget—for standard enterprise plans. That’s where Webex Calling comes in.
Webex Calling delivers enterprise-grade calling for SMBs. The reasonably priced Business plan offers many of the same features as Webex’s Enterprise plan. It includes:
- 24-hour meeting length limits
- 200 attendees
- 10GB cloud recording
- Closed captions, meeting highlights, and hand gesture recognition
- Streaming to Facebook Live or YouTube
- Call waiting
- Hold and transfer
- 6-way conference calls
- Unlimited domestic long-distance and local calling
- Encrypted cloud recordings
The downside is that if you want some of the more advanced calling features, such as call barging, call queue, call recording, group paging, and voicemail-to-email transcription, you’ll have to pay a custom price for a true Enterprise plan.
What Makes Webex Calling Great
Webex Calling is easy to navigate, both for admins and end-users. With end-to-end encryption and TLS 1.2 (signaling) & AES-256-GCM (media), the Business plan provides a safe and secure platform for every call. Enterprise customers will also benefit from Webex Calling’s FedRAMP authorization, which provides premium security.
Business and Enterprise customers each enjoy help center, chat, and call-in customer support. Enterprise gets the added bonus of a dedicated representative to promptly help with any issue that arises.
We also love Webex Assistant, an AI assistant that helps take notes and provides closed captioning. Webex Calling also comes with an audio intelligence feature that minimizes background noise both for the agent and the client.
While Webex offers a free plan for quick meetings, the calling features for it are too limited to recommend. Instead, we suggest that SMBs try either the Webex Call plan, which starts at $17 per user per month, or the Webex Suite for $25 per user per month.
Best Business Phone Systems: Your Top Questions Answered
Nextiva or Vonage are the two best business phone systems for most businesses. They both provide exceptional call quality, high reliability, and a robust suite of features to accommodate the needs of small and large organizations alike. Nextiva is ideal for companies seeking a unified communications solution. In addition to traditional phone features, Nextiva comes with video conferencing, team messaging, fax, mobile SMS messaging, and more. Vonage is perfect for connecting dispersed employees and communicating with customers across every channel.
Most business phone systems cost around $15 to $30 per user or per line per month. But the price varies depending on the phone system provider, features offered, and plan selected. The best way to keep costs low when you’re shopping around and evaluating different business phone systems is by bundling services. It’s usually cheaper to get features like voice, video, messaging, and other team collaboration features in a single plan instead of getting them all from separate providers.
The first thing to look for in a small business phone system is call quality and uptime rates. A robust suite of features is useless if calls are constantly dropping or the audio echoes. You should always try to test a business phone system to ensure its compatibility with your network before locking in a contract. Beyond quality and reliability, look for features that you want or need to communicate. Examples include video conferencing, team messaging, fax, call recording, virtual receptionist, call forwarding, overhead paging, and more. Then find a plan within your budget that includes all of those features.
The three most common types of business phone systems are VoIP, PBX, and KSU. These variations can be deployed in the cloud as a hosted service or on-premises as a non-hosted solution. VoIP phones have become a favorite for businesses seeking a modern phone system with a versatile communication suite. You can check out our guide on VoIP vs. landlines to better understand the differences between these business phone systems.
No, you do not need a separate cell phone for your business. If you’re an entrepreneur or sole proprietor, you can add a business line to your smartphone by using Talkroute or Grasshopper . Simply download the respective mobile app to your device, select your number, and enjoy the benefits of a business phone system without having to purchase another phone. All of your incoming calls will be separated, and you can make outgoing business calls through your personal cell phone using the Talkroute or Grasshopper mobile app.
Ooma is the easiest way to get a business phone number. When you sign up, it’s easy to select a local or toll-free number. You also have the option to port over your existing number if you want to keep it. Since there’s no hardware required to use Ooma, you can start making and receiving calls on your new business phone number right away through Ooma’s intuitive desktop and mobile apps.
The biggest difference between business and residential phone systems is the features. Business phone systems have more capabilities than phones designed for home use. Both phone systems will support basic features like caller ID, voicemail, and call waiting. But business phones typically include call forwarding, cloud recording, hold music, virtual receptionists, and more. Business phone systems can also come with unique features, like call whispering for sales reps and video conferencing for internal communication.
Your business needs as many phone lines as simultaneous calls at peak capacity. If you have 20 incoming and outgoing calls at your busiest times of the day, you’ll need a minimum of 20 phone lines. This number will vary based on business size and call volume. For example, a contact center may need 50 or more phone lines, whereas a small business can get away with just three phone lines. Each business phone line does not need to be its own dedicated number. You can also add extensions to your business phone line for different employees or departments.
Quick Sprout Business Phone Services Related Content
Want to learn more about using business phone services? Browse these guides, reviews, comparisons, and top lists to dig in.
Business Phone Systems Guides and How-Tos
- How to Fix a Phone Echoing
- How to Get an 800 Toll Free Number
- How does Google Voice Work?
- How to Set Up a Conference Call in 5 Simple Steps
- Fixed VoIP: The Complete Guide
- Non-Fixed VoIP: The Complete Guide
- The Essential Guide to How Fax Works
- VoIP Quality Test
- VoIP Speed Test
Business Phone Service Comparisons
- VoIP vs. Landline
Business Phone Service Related Top Lists
- Best VoIP Providers and Phone Services
- Best Virtual Phone Number Companies
- Best Office Phone Systems
- Best Cloud Based Phone Systems
- Best VoIP Call Recording Solutions
- Best Call Recording Software
- Best Multi Line Phone System for Small Business
- Best Call Center Software
- Best Call Center Services
- Best Outbound Call Center Services
- Best Online Fax Services
The Top Business Phone Systems in Summary
Every business phone system on our list provides organizations with a streamlined way to manage calls and automate repetitive processes. You and your team will benefit from a combination of desktop and mobile apps for the ultimate flexibility in business communications.
We recommend Nextiva or RingCentral for most businesses. But the best solution for you depends on your team size, budget, and the features you’ll actually use. From startups to enterprise organizations and everything in between, there is a solution for everyone on our list.
Home · technology · How Much Does An Office Telephone System Cost In 2024?
- October 11, 2023
How Much Does An Office Telephone System Cost In 2024?
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How-to guides, tips and actionable advice on how to manage your BPO team like a pro.
Written by Marielle G.
Table of Contents
Business phones are significantly more cost-effective than you think. Although the types of phone you use and the functions you need to run your business will ultimately determine your monthly cost, on average, a business phone system costs around $15 for a barebone plan, while for an enterprise, it will cost around $35 a month.
Telephone systems enable businesses of all sizes, as well as home offices, to improve the consistency and clarity of their communications. Systems can be linked to internet services to lower the cost of long-distance and international calls, making for lower overhead business phone system costs.
The bottom line is that modern organizations and businesses must continue to invest in high-quality voice phone service that gives their customers access to a VoIP system that is both highly flexible and reliable.
Although the telephone is a necessity, it may be a major cost commitment for small organizations. Whether you’re searching for a new phone system or a replacement, it’s helpful to know that the typical company updates its phone system every seven years. The proper choice can suit your demands for many years to come.
Let’s delve into the factors that determine your business phone system cost.
1. Number Of Users
How many phone lines do you need for your business? Analyzing your company’s user demands might be centered on the overall number of phone lines necessary.
Certain departments inside your firm, such as reception, accounting, or the postal department, may only require a single line for a large number of employees.
When doing user planning, it is critical to anticipate not just your client’s desire to reach different regions of your organization but also workers’ potential need for internal interaction.
2. Features You Need
Many interesting alternatives are available for businesses today that recognize that the world has gone mobile.
Companies can use basic phone service packages to make and receive local and long-distance calls. However, many businesses are discovering that opting for add-on phone services may dramatically boost productivity and cooperation.
Frequently sought add-on services include: – Conferencing – Mobility – Contact center – IVR (Interactive Voice Response) – Improved 911 services – Interoperability with CRM, ERP, and other internal systems.
These add-on services can greatly improve customer and staff satisfaction with your new phone system. However, they will raise your cost above and beyond more basic phone service packages. These services may be combined for cost savings depending on your provider.
3. Phone Models
Some small company owners and IT experts may be shocked to find that not all business phone models are created equal. Business phone system costs might vary greatly depending on whether you choose a generic model, a mid-range name-brand model, or a top-of-the-line name-brand one.
Depending on the model of your phone, the following phone features may or may not be available:
- 3-way calling
- Automatic callback
- Call waiting
- Call transfer
- Call forwarding
- Inside/outside ringing
- Call Recording
- Conference calling
Business Phone System Cost is Tied To The Phones You Choose
IP phones (desk phones that may be used with VoIP systems) can cost anywhere from $50 to $500 per unit, depending on their sophistication and feature set. More information may be found in the section on the cost of IP phones, which can be found further down.
Phone Model Types
1. hard phones.
Hard phones, like ordinary phones, are kept on your desk or in a meeting room. Hard phones can be used for the following purposes:
- Conference calls
- Accessing voicemail
- Direct calls
- Handsets, headsets, Bluetooth, and speakerphones are used to communicate.
Softphones are virtual phones that operate in an app on a device (such as a computer, tablet, or smartphone) and may be used in ways that are similar to a hard phone.
A softphone is software that is installed on your desktop or laptop computer that allows you to make and receive phone calls from it. Their low cost makes softphones ideal for road workers, mobile professionals, and even call centers.
3. Wireless IP Phones
A wireless IP phone is an IP phone that has an integrated Wi-Fi or DECT transceiver device for connecting to a network access point or base station. This enables you to roam freely around your house or business while on the phone. At a hotspot, you may even make and receive phone calls!
4. USB Phones
A USB phone connects to your computer through the USB port. A USB phone can be used in combination with a softphone program such as Skype.
5. Desktop VoIP Phones
This is a typical VoIP phone for business. It connects to your VoIP phone system or service provider over an Ethernet and has all of the standard phone functions.
A videophone is an IP phone with the additional capability of capturing video using a tiny camera connected to the handset. Videophones are an inexpensive method to stay in touch and view someone from anywhere in the globe since they are a perfect alternative for face-to-face meetings.
7. Conference Phones
IP conference phones serve the same function as their analog equivalents. IP conference phones are often used in big offices and conference rooms for multi-party phone conversations.
4. VOIP vs. On-Premise PBX Phone Systems
With a hosted VoIP system , your system provider will host the VoIP software on their servers, maintaining and upgrading it for you. If you choose hosted VoIP, you’ll be in good company: it’s the most common type of VoIP phone system.
You will have extremely few (if any) setup expenses or upfront expenditures if you pick a hosted VoIP system, but you will have to pay recurring monthly prices.
One of the most important price variables is internet service because modern phone systems require faster connection speeds in order to have more capacity to provide excellent call quality.
On-Premise PBX Phone Systems
Having an on-premise VoIP system , also known as an on-premise PBX (private branch exchange), requires designing, hosting, and managing your company’s telephone system on its servers.
It is a more complicated – and often more expensive – method of accomplishing things. It does, however, give you and your employees complete control over your phone system.
If you choose an on-premise phone system, you will incur significant upfront and set-up expenditures, as well as continuing charges for maintenance and configuration.
5. Expansion Plans: Do You Need A Key-Systems Phone?
A telephone system is an essential component of infrastructure for any contemporary business. It links your company to the outside world and helps workers efficiently interact with one another as well as with external clients and partners.
The two primary phone systems used in today’s industries are a Key System and a Private Branch Exchange (including classic PBXs and IP PBXs). The optimum selection for your business will be determined by the size of your organization, the number of handsets required, the number of calls handled, and the features desired (voicemail, conference calls, advanced call queuing, etc.).
6. Number Of Locations For Your Business
Is your business based in a single location, or do you have several sites that require phone lines?
The installation expenses for a firm with 20 customers at a single location will ultimately be less than the cost of establishing phone lines at numerous locations. Each installation site might raise the overall cost of your small company phone system.
Whether you have one site with ten employees or ten locations with numerous employees per location, makes a huge impact on cost. Some companies charge a per-location installation fee, which can dramatically increase expenses.
7. Setup And Installation Costs
Your phone system’s yearly maintenance expenses might vary depending on a variety of factors, including your internal IT resources. If your internal staff is capable of handling basic troubleshooting and training, your requirement for external maintenance assistance may be reduced.
Although provider offers vary, many small companies choose yearly (contract) or as-needed maintenance support. Contracts generally cover a set number of hours on-site each year, as well as any necessary equipment replacements or changes.
It is essential to consult with a professional who can assess your needs and provide recommendations based on them. Most business phone system cost estimates will then be based on what you truly require. That way, you won’t wind up with too few features and lament the lack of utility or spend a fortune on items you won’t use.
A low-end system may cost your organization around $200 per device, depending on the number of add-on services you choose. A name-brand system will cost between $400 and $600 per device. A fully equipped, top-of-the-line name-brand system might cost up to $1,000 per phone.
Business Phone System Costs By Type Of Phone
Most of us associate analog phones with the landline phones we grew up with. To link calls between two phones, voice signals are transferred over copper cables through a series of actual switch boxes.
The price of an analog phone system is decided by the size of the company and the extra services needed. Setup and maintenance expenses must be included by business owners, and these prices vary based on the number of employees and the type of system used.
An analog phone system for a firm that uses a PBX would cost between $500 and $2,000 per user, depending on the size of the system and the installation needs.
Analog phone system setup necessitates the purchase of a PBX switching system, phone handsets, add-on features, cabling, and installation, as well as training and support required by your company. As your business expands, you’ll need to budget for the additional continuing costs of analog PBX system configuration, maintenance, security updates, and so on.
According to 2017 statistics, these expenses average around $7,600 per year. Individual handsets cost approximately $200 apiece, so you’ll need to add that in as well if you increase your staff.
Hosted VoIP Phones
The cost of VoIP services is often determined by the number of users, the number of extensions, and additional features. Many VoIP providers offer a per-user discount for bigger teams, as well as reductions for yearly payments versus monthly subscriptions.
Depending on the supplier, additional features such as conferencing, text message support, app and cloud connectivity, and personalized greetings may boost monthly prices.
The installation will cost an average of $4,450, which covers the phone, provisioning, power source, and router. It’s worth noting that utilizing software-based phones (softphones) instead of traditional handsets can save you a lot of money. With their low cost and versatility, softphones are increasingly used by many organizations, including call centers.
VoIP expenses range from $10 to $60 per user each month. The amount you pay is determined by the number of services you want in addition to baseline choices such as call forwarding, call waiting, business SMS, and basic teleconferencing.
In virtually every situation, VoIP offers considerable cost reductions over analog. Even when basic services such as call waiting, caller ID, and voicemail are included, landlines remain more costly than VoIP systems.
Key Phones Systems Cost
These systems make use of a central device that manages many lines and extensions, as well as telephones with various buttons and lights that indicate which lines and extensions are active.
A typical key system has all of the functions that a business would anticipate and require, including hold, intercom, memory dialing, music-on-hold, paging, speakerphone, and more.
Since many of its tasks overlap, the ordinary user may be unable to distinguish between a key system and a PBX system. Key systems are usually less versatile and adaptable than PBX systems, but they are also less expensive, costing between $300 and $1,000 per employee.
The key system is intended for a small business. It has a PBX system with many lines and extensions. It has music on hold, paging, voicemail, memory dialing, and an intercom. The system costs $3,000 to install, $1,700 to set up, and $600 to maintain on a monthly basis. The annual maintenance price is $6,600.
A core system unit that handles six lines and 16 extensions costs between $400 and $500 brand new. The cost of a system with eight lines and 24 extensions ranges from $500 to $1,000, depending on the features selected.
Total Estimated Costs For Small Business Phone Systems
Selecting the right business phone system requires thorough research to determine the number of lines needed and which system offers the specific services your company requires.
When making this decision, it’s crucial to consider your budget and existing communication infrastructure. A PBX or key system might be the best option for businesses with limited high-speed internet access due to geographical constraints.
Although a business phone system can be a significant expense for a small business, the annual maintenance and training costs are generally more affordable than the initial installation.
Having said that, contemporary PBX systems (as well as hybrid key systems) may still be an excellent method for organizations to stay connected. If you want to dive deeper into finding the best multi-line phone system for small businesses in 2023 , check out our blog for detailed insights and recommendations!
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Business Phone System Costs [PBX, VOIP,8×8 & More]
Business phone systems are now offering laundry lists of exciting features, including software and Internet compatibility, as well as virtual phone services, video conferencing, and more. Nowadays, you can find business phone systems that even sync up to the cloud and connect a company’s worth of remote workers in a virtual sphere.
On average, a business phone system will cost $1,250 per month. The cost of a VOIP phone system is $40 per user, per month . A KSU-less system costs $100 to $250 per phone , a 3CX Service will cost $300 per year , while a PBX system will cost on average $1450 per user.
Most business phone systems offer packages that you pay monthly and per user, although some do offer packages meant to include a small team , these prices vary vastly among different types of business phone systems, manufacturers, whether or not equipment is needed, and how many users you are getting set up.
In this guide, we will compare and contrast the costs of different types of business phone systems on the market.
By breaking down the costs of various phone plans and coverage offered for VoIP, 3CX, cloud phone systems, and more, we’ll see which plans offer the best average costs for businesses. Further, we’ll explore factors that can affect the cost of a business phone system, as well as the costs of physical hardware and when it is necessary.
VoIP Phone System Cost ($899)
VoIP phone systems – otherwise known as voice over Internet protocol phone systems – make use of broadband Internet connection for making phone calls. As opposed to other phone systems, you aren’t using an analog phone line. There are several types of VoIP phone systems, including computer-only systems as well as VoIP adapters for traditional phone lines.
Some VoIP services allow users to make long-distance calls, international calls, mobile calls, and local calls. On the other hand, some VoIP services only allow you to make in-service calls among other people who have the same service. Because of these discrepancies in services, you’ll find that there are also discrepancies in cost for the VoIP phone systems .
The average cost for a VoIP phone system , when comparing prices of different types of systems, is around $899 , with the low end of costs just below $200 and the high end of costs just above $1500. Below, compare some of the average costs of VoIP phone systems, based on popular providers offering this business service on the market.
RingCentral VoIP Pricing ($43/user/month)
RingCentral offers a VoIP phone system to businesses that allow customers to make voice calls over IP via desktops, laptops, and smart devices. Some of the features that you can add to Ring Central’s VoIP service include:
- Team messaging
- Online meetings
- Call management features
You get free or nominal-fee long-distance calling, voicemail, and call forwarding, as long as you are connected to the Internet. RingCentral boasts of 24/7 customer support, minimal hardware necessary, and easy setup for businesses. Their prices come to an average of about $43.24 per month, or if you pay annually, you’re looking at an average of about $33.24 per month .
However, different plans are priced differently, and they are as follows.
You’ll notice that you can save more than 30% by paying for annual plans with RingCentral, which is a great bargain to take advantage of. Ring Central’s VoIP service is best for smaller-scale businesses, so while their service is affordable, it may not be the best deal for every business.
Grasshopper VoIP Pricing ($55/month)
Grasshopper is unique in that you won’t be buying a VoIP-specific phone system. They have a basic subscription model with three options, each of which includes VoIP and WiFi calling services.
Based on an average of their three plan prices , we found that it costs around $55/month on average to use their services, but you can save around 10% by purchasing an annual plan ($50/month) .
They offer a solo plan set at $29/month (including 1 phone and 3 extensions), a partner plan at $49/month (3 phones and 6 extensions), and a small business plan at $89/month (5 phones and unlimited extensions. When purchasing annually, these plans are $26/month, $44/month, and $80/month, respectively.
3CX Phone System Cost ($250/year)
3CX phone systems are private branch phone systems based on a SIP standard. What sets them apart from other phone systems is that they are software-based, and you can use them to make VoIP calls (as described above) and public switched telephone network calls.
They work with Linux and Microsoft operating systems. Some of the other perks of 3CX PBX include easy backup and restoration, unlimited extensions, a digital receptionist, Microsoft 365 integration, and more.
3CX offers PBX phone systems that are designed for remote working, including on-premise and cloud services. They also offer services in live chat as well as video conferencing, including smartphone apps and extensions for unlimited users. One of the great perks of 3CX and a big reason why businesses love it is that you can get the first year of service for free.
Average Costs of 3CX Services
After that, however, you’ll be looking at an average price range of about $200-$300 per year. This cost is broken down into various components of service, as well as different packages. Their most expensive package is the Enterprise, while the other two packages (Pro and Standard) sit just below it. Each of these packages starts with an inclusion of 12 users and 4 simultaneous calls. But there are costs to adding on more users.
The Standard is free for the first 2 years, while the Pro and Enterprise plans are free for the first year alone. The pro plan has an annual cost of $145 , while the Enterprise plan has an annual cost of $180 . Each of the three plans is $100 per year if they are hosted. And finally, it costs $75 for a support ticket for each plan .
One of the price perks of 3CX systems is that the more users you add to your plan, the lower the cost is going to be.
Buying in bulk seems to be the best way to get more bang for your buck.
As soon as you add just one more user than 12, you’re looking at an extra $1.12/user/month (Standard), $1.70/user/month (Pro), or $2.08/user/month (Enterprise). As you add more users, those costs decrease by a few cents each.
Virtual Phone System Cost ($50/user/month)
Virtual phone systems are similar to PBX and VoIP services, where you can make and receive calls via an Internet connection on desk phones, mobile devices, and desktops alike. The nice thing about virtual phone systems is that they let users access the service anywhere they take their device(s). You have virtual lines, as opposed to physical phone lines, and this works by making use of VoIP technology.
The main difference between virtual phones and PBX phones is that virtual systems do not require physical hardware setup or maintenance, and virtual systems actually have text message and voicemail transcribing functions.
Virtual phone systems may actually be a very cost-effective option if you operate a small business or company. On average, they cost just below $50/user/month . And, if you choose to get compatible desk phones for these systems, you’re looking at an added average cost of about $215 per phone.
Or, to compare market costs, you can browse quotes we’ve pulled from companies selling virtual phone systems for businesses on the market right now. Prices will vary based on what types of plans the companies offer to businesses, as well as add-on packages, deals, and other factors.
- Aircall Virtual Phone System ( $40/user/month for essentials or $70/user/month for professional plans) – Aircall is a virtual phone system that is a great option for support and sales teams. They champion call center software, trusted by more than 8,000 companies worldwide. Aircall lets customers save 20% per month by purchasing an annually billed plan, as well. Custom plans require a quote.
- OpenPhone Virtual Phone System ( $10/user/month for a standard plan or $25/user/month for a premium plan) – OpenPhone is known to be a cost-effective solution for small operation businesses. It’s cheaper than most plans because you can automatically add work phone numbers to the devices you already own, thus eliminating the need for any hardware purchases. It works with iOS, macOS, Android, Chrome, Safari, and Firefox. Enterprise (top tier) plans require a quote. Do note that international calling and messaging cost an add-on fee, and so do add additional phone numbers ($5/number/month).
- CallHippo Virtual Phone System ( $17/user/month for bronze, $30/user/month for silver, $45/user/month for platinum, and custom quotes for enterprise) – CallHippo is a virtual phone system including call tracking and speech analytics. They also offer voice broadcasting services. You can integrate systems such as Zendesk, Slack, Salesforce, and more into CallHippo’s business phone system in order to streamline your company’s workflow. Add-ons cost extra, including custom caller ID ($12/user/month), call scribe ($10/user/month), voicemail transcription ($1.5/user/month), and call tracking insights ($25/account/month), among others.
8×8 Phone System Cost ($33/user/month)
An 8×8 phone system is not that different from other phone systems on this list, but it is one of the older systems on the list. 8×8 is a type of phone system that businesses use for video conference calls, messages, and voice calls. It’s actually been around since the late 1980s, and it started as a semiconductor phone company. Nowadays, it integrates modern phone services such as cloud-based VoIP to accommodate businesses that do work remotely or mainly over the internet.
The 8×8 phone system platform is host to some exciting features such as:
- APIs and apps
- Team chat platforms
- Local and global phone calling
- HD video meeting for desktop and mobile devices
- Artificial intelligence-powered contact center
8×8 Plan Costs
When we looked at the average cost of an 8×8 phone service, we directly calculated the average cost of these three plans, based on their per-month costs ( $33/user/month ).
When it comes to the average cost for 8×8 phone systems , we first need to examine the three different phone plans offered by the company. They offer a stand-alone small business phone system plan called the 8×8 Express that costs just $12/user/month (with a free one-month trial available).
This Express plan features voice/video/messaging, unlimited calling in the US and Canada, voicemail, hold, AI, and more.
One tier up from Express is the X2 plans , which feature all-in-one voice, video, and chat features. This costs $24/user/month if billed annually – otherwise $32/user/month . With this plan, you also get small business and enterprise integrations, as well as fax functions.
And then there are the X4 plans (top tier), which have analytics for administrators and supervisors. You get unlimited voice calling in over 40 countries, as well as call quality reports, and more. It costs $44/user/month if billed annually – otherwise $57/user/month .
PBX Phone System ($1,450)
A PBX phone system is a Private Branch Exchange phone system that works like an internal phone network for a specific company or business. These systems can also operate with external lines for calls. Calls between users of a phone plan are free, but you do have to pay for other types.
The PBX phone system has many features that other phone systems do, such as voicemail, call forwarding, AI attendants, and call transfers. Most of the time, you’ll find that they either operate with VoIP (Internet-based connection) or with analog and digital phone lines. You actually have cloud, VoIP, and analog systems for PBX phone services, and they only differ slightly. When we look at the cost breakdown, we can consider the average cost for these different PBX setups.
Analog PBX Systems ($900)
Analog means that this phone system is an intra-office setup. It runs via PSTN (public switched telephone network) and POTS (plain old telephone network). As opposed to VoIP and cloud-based systems, analog systems do not connect via the Internet, so you won’t get the same features that those systems do.
On average, it costs a business about $900/employee for a complete analog PBX system setup. This cost estimate factors in the cost of equipment such as phones, base systems, training for setup, and installation. Note, however, that you won’t necessarily pay for all of these things if your company is already aware of how these products are set up and work. Further, when buying in bulk for a whole business, you can discount the price.
VoIP PBX Systems ($1,000)
VoIP PBX systems, as opposed to analog systems, are much more forward-thinking. As we described above, VoIP phone systems operate with an Internet connection, so they give you capabilities to use video conferencing, messaging, AI receptionists, voice calling, and more.
It takes the old analog PBX system and just enhances it with VoIP service. On average, you can get a VoIP phone set up for a PBX phone system for around $1,000.
Cloud PBX System ($2,000)
Cloud PBX Systems are essentially VoIP systems, and they are known as hosted PBX systems. These systems run with a connection to VoIP providers. You simply need a broadband Internet connection in order to get these systems to work. On average, you’re looking at a cost of around $45/line as well as an average of just over $2,000 for hardware.
*New* Unlimited Users Plans as low as $69.99/mo for the entire office
Cloud phone system cost ($30/month/user).
Cloud phone systems are just as their name suggests; they enable phone capabilities via the cloud. Cloud-based phone systems are very similar to VoIP phone systems, but they do have some discrepancies. While these two system types serve the same functions, cloud-based systems are more comprehensive than VoIP systems.
This is because the cloud incorporates all of the same VoIP services (Internet-based phone calls as opposed to analog phone calls), as well as the ability to turn any device with an Internet connection into a phone.
Further, cloud phone systems have the ability to add on collaboration features for shared users. Cloud systems utilize AI technology, instant messaging, video conferencing, call forwarding, auto attendants, voicemail-to-email, international calling, ring anywhere, and more.
When it comes to the cost of cloud phone systems, they don’t differ too much from VoIP system costs since they are so similar. The average cost of a cloud phone system is around $30 per user per month , but additional services such as contact center functions are where you start racking up costs ( around $115/month ).
Or, you can compare by looking at quotes among companies offering cloud-based phone systems for businesses:
- Ooma Office Cloud Phone System ( $19.95/user/month for basic or $24.95/user/month for pro) – Ooma offers team video conferencing, holds, extension, virtual receptionist, and other services like the ability to manage business phones via mobile apps.
- Dialpad Cloud Phone System ( $15-$20/user/month for standard or $25-$30/user/month for pro) – Dialpad is a basic cloud phone system that offers call center services, messaging, meetings, call controls, voicemail, fax, and of course service in multiple locations. Their Enterprise plan requires a quote.
- Avaya OneCloud Phone System ( $41/user/month for digital, $71/user/month for voice, or $111/user/month for all media) – Avaya connects your business workflow via the cloud in a comprehensive set of services for calling, messaging, analytics, and more.
Factors That May Affect Phone System Costs
The above estimates are of course just starting points when it comes to phone systems, and they don’t account for individual differences among businesses. Depending on whether you are a small business with less than 10 total employees or a startup that needs to provide phone systems for 100 people, your costs will differ significantly.
Below, take a look at some of the most common factors that play into cost discrepancies among business phone systems. Based on what type and size of business you have, your costs will be unique.
- Cost is dependent on the package and provider (some packages are offered per user/per month, while others include multiple users or phone lines in one monthly rate)
- The cost will decrease if you buy a phone system in bulk (i.e. you have a large company with many employees you are including in the plan)
- The cost will decrease if you pay annually (companies typically decrease the equivalent monthly rate by anywhere from 10-30%)
- Some phone systems and plans offer free trials, wherein you can get some services for free for the first month or year(s)
- Some phone systems involve extra expenses for installation, wiring, and setup, as well as hardware and physical phones
- Add-on packages are an extra expense that you won’t necessarily need, but they can add services to your plan that you may find essential for your business (like customer support, for example)
Average Cost of Business Phone System Equipment
One thing you need to consider when choosing a business phone system is that certain types of phone systems require equipment or hardware to operate.
While virtual and mainly cloud-based systems do not, analog systems do. This means that for phone systems such as the VoIP systems that link into analog phone lines or any other system that connects to physical in-office phones, you need to purchase equipment.
In order to understand the costs of hardware, we can look at some typical pieces of hardware a business might be purchasing.
Note that not every business that requires phone hardware or handsets will require the top of line equipment.
Some businesses, such as small operations like an online freelancing agency or a 5-woman business may only require simple phones for their office space.
On the other hand, if you’re running a quickly-growing startup with both remote and in-person offices, then you may consider going with advanced business phones and buying in bulk to suit your needs.
Average Cost of Business Phone System Installation and Setup Services ($400)
Costs of business phone systems will also vary based on the initial costs, which are made up of setup and installation fees. While not every business will require setup or installation services, those who do should be aware of the cost discrepancies.
On average, phone system installation costs ring in at just below $400 in the United States, with the lowest costs being just below $100 and the highest costs being greater than $1200.
While these figures represent national averages, we must still account for differences in installation costs for the different kinds of phone systems we spoke about in today’s article.
The below averages give examples of costs for installation and setup for VoIP and PBX phone systems, in order to compare systems that are mostly virtual with systems that are more hardware-based.
VoIP Phone System Installation and Setup Costs ($4,500 + $600)
You are often going to face an initial, one-time setup fee for installing a VoIP phone system. However, given that VoIP works via an Internet connection, your fees won’t be as high as other systems’ fees.
If you have any analog elements to your personal VoIP phone system, then the costs of installing phones, power sources, routers, etc. will ring just below an average of $4,500. On the other hand, the cost of setup (one-time setup of cable run and virtual configuration) will be just above $600 on average.
PBX Phone System Installation and Setup Costs ($2,500 + $1,650)
When it comes to PBX phone systems, know that your average costs are much steeper than VoIP costs. This is because PBX phone systems rely on an interconnected set of phones within an office. There is more equipment to account for, as well as analog components.
For PBX phone systems, you can expect to pay around $2.5k on average for the initial setup of the main units. And when it comes to installation services, you can expect to pay more than $1,650 on average for wiring and other parts.
Pricing Factors for Office Phone Systems
There are many good questions a business should ask before they determine the pricing that works for them.
If you are wondering how much an office phone system will cost, consider these factors:
The number of users practically sets the price of your phone system. User needs should be focused on the number of phone lines required.
Some components of business may only require a single user, the reception or the mailroom.
When conducting user planning, it’s important to consider not only external needs but how employees must communicate internally as well.
Number of Locations
If a business has more than one location, this cost will also have to be factored into the budget. A company with 20 users and a single site will have considerably fewer costs than a company with 4 sites.
Every location will add to the cost of installation, so this is also something to consider.
Not every phone is priced the same. Depending on the brand and features, the hardware costs can vary drastically.
Whether you select a generic model or a brand name, other phone features you may choose from include:
- Call forwarding
- 3-way calling
- Call transferring
- Automatic callback
- Call waiting
- Inside/outside ringing
All these features will have to be aligned with a company’s needs to determine accurate pricing.
The basic package of any phone system gives an organization the ability to place and receive local/long-distance calls. This is the bare minimum.
There are many additional features you can choose to add on, depending on what you must achieve.
Some of those resources are:
- Enhanced 911 services
- Call center
- Interactive Voice Response (IVR)
- Integrated CRM, ERP, or other internal software
Although these types of services can increase the cost of an office phone system, when integrated, they may decrease your cost on other apps, like 3 rd party CRMs.
Any employee who will be using your phone system must also be trained on the hardware and software. Effectively operating new technology will always have a cost associated with training.
The amount can vary by site and number of employees. Thus, a large company must incorporate training costs when considering the installation of a new phone system.
Typically, office phone systems do not require a lot of maintenance, but that can vary according to the software. The more complex the system, the more you’ll need updates.
Provider offerings can differ. Many small businesses opt for maintenance assistance in their contracts. This can keep the cost down.
However, if you have an internal IT staff, it may not be necessary to seek outside help.
Ultimately, the type of system you select will affect the cost of hardware, installation, and maintenance. It may also dictate the pricing of any add-on service.
Some general factors to consider when selecting a system include:
- Reliability and uptime
- Level of service
- Add-on features
- Customer support
- Integration with other systems
- Easily to upgrade (better to scale)
The more research and planning performed, the fewer surprises on pricing.
Comparing The Top 3 Best Business Phone Systems
Once the expected budget is determined, it’s time to investigate the top brands on the market. All pricing plans are on a monthly basis and determined by the user.
Typically, if you pay the annual fee, it’s at a much lower cost. The best three out there for any business right now are RingCentral, Nextiva, and Vonage.
RingCentral has a sliding bar on its pricing plan. You can choose whether to view them at annual or monthly rates. If you pay by the year, you save 33% on cost.
The company size is broken into four sections:
- 100-999 users
- 1000+ users
The pricing breaks down into four packages:
This is the basic package and with 1 user, the price is $29.99/month . In a company of 2-99 users, it goes down to $19.99/month.
The Essentials package is not available for any company larger than 99 people.
The Standard package is the next level up and starts at $34.99/month for 1 user . It then decreases to $24.99/month for companies with 2-99 users.
For a business between 100-999, the price is $32.99. Anything over that is offered at $29.99/month.
The Premium package has many more features than the first two and starts at $44.99/month for 1 user .
For a company with 2-99 users, the price is $34.99. 100-999 users the cost is $32.99 and anything over that is $29.99.
The Ultimate package comes with the most features, from Salesforce integration to multi-site support. For 1 user the cost is $59.99/month .
For 2-99 users, it goes down to $49.99. For 100-999 users, the price is $42.99 and anything more is $39.99/month.
The features for RingCentral differ by package and are great in number. Every package comes with the main functions of an office phone system, which include:
- Unlimited calls in the US
- A toll-free or local phone number
- 100 toll-free minutes/month
For more information, RingCentral has excellent customer support. They also have add-ons like extra phone numbers and international calling.
The pricing for Nextiva is divided by package, users, and contract.
There are three ways to pay:
- 36-month agreement (by month)
- 12-month agreement prepaid
Your lowest rates will be if you prepay for the contract. Promising 36 months will bring in the next lowest costs. The company size is divided as such:
- 20-99 users
Again, the more users, the lower the rates. The difference between the rates of 1-4 users and 100+ is about $10-11/month .
The three packages Nextiva offers are Basic, Pro, and Enterprise. They all include a business phone service and customer relationship suite.
The basic package starts at $20/mo/user and goes up from there depending on the factors discussed above.
Features include the ability to:
- Manage prospects
- Service customers
- Collaborate with teams
The most expensive price for this package is for 1-4 users paying $35/month/user .
The Pro package starts at $25/month/user . It includes everything that the Basic package does, plus the ability to survey customers.
The most expensive price for this package is for 1-4 users paying $38/month/user.
The Enterprise package starts at $30/month/user . It includes everything that the other two packages offer, plus the ability to run analytics and live chat.
The most expensive price for this package is for 1-4 users paying $55/month/user.
The Vonage phone system offers over 40 different features with every package. Unlike the other two on the list, they have separate pricing for a mobile plan.
Every plan comes with a free 14-day trial and includes:
- Service via high-speed internet
- Use your own phone number
- 24/7 Us-based tech support
- 999% uptime reliability
- Large selection of hardware
The system is divided into lines and packages.
- 20-99 lines
The tiered pricing is:
For anything over 100 lines, a business should contact sales for more custom pricing.
The Mobile package allows a business to communicate through their mobile device or desktop. This is the best option for remote teams and for people who don’t need a desk phone.
Pricing is as follows based on lines:
- 1-4 lines for $19.99
- 5-19 lines for $17.99
- 20-99 lines for $14.99
- 100 + lines call for a quote
The Premium package allows a company to communicate on any device. This package is best for traditional office environments.
- 1-4 lines for $29.99
- 5-19 lines for $27.99
- 20-99 lines for $24.99
The Advanced package is best for more complex analytics and business communications. You also receive a dedicated team with this package.
They will help set up and onboard staff to ensure success.
- 1-4 lines for $39.99
- 5-19 lines for $37.99
- 20-99 lines for $34.99
Other great phone systems are the Cisco phone system and Mitel Phone system .
Businesses are increasingly turning to more advanced forms of phone systems to run their operations. Whether your company is small or large, remote or interconnected within an office, there are plenty of phone systems available at reasonable costs. When choosing a plan, you should consider the most integrative phone systems, such as cloud-based, VoIP, 3CX, 8×8, and other phone systems, which we outlined today.
In general, you will pay far more for a phone system that requires hardware and installation than you will for a virtual or Internet-run phone system that your company can use remotely. Most phone plans themselves do not cost more than around $30-$50 per user, per month.
However, if you have to purchase add-ons, upgrade, or integrate handsets and other equipment, you could be looking at extra expenses. Make sure to shop around and pinpoint what type of phone system best suits the size, scope, and needs of your business before choosing one. You may be interested in Predictive Dialer .
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Best Landline Home Phone Service in Santa Clara, CA
Find cheap landline phone service providers in Santa Clara
US Mobile home phone
Ooma home phone
Rob has 15+ years experience running price comparison & review websites that empower consumers to find the cheapest cell phone services, cell phone deals, home phone, and internet providers available. He has been published in Forbes, US News, Entrepreneur, Huffington Post, Inc.
5G wireless networks, cell phone plans, cell phone deals, MVNOs, internet services, tablets, comparison shopping, money saving, reviewing telecom products & services
Amanda has 20+ years of experience as an educator. Her teaching career, paired with her love for research and technology, has led her to MoneySavingPro. Her personal experience with eSIMs and MVNOs after switching her entire family away from big wireless in the last few years has taught her the ins and outs of the industry. And saved her hundreds per month.
Writing, editing, proofreading, researching, blogging, collaborating, communicating, CMS, eSIMs, MVNOs, 5G home internet & comparison
Last updated on October 8th, 2023
MoneySavingPro independently researches the products & services to bring you our recommendations. We may earn money when you click our links - disclosure policy .
If you're looking for the best home phone providers in Santa Clara, you're in the right place.
According to Statista, there are still over 90 million landlines in the US. However, with so many types of landline service available, we'll help you find the cheapest home phone service for your individual needs.
You'll learn all about the cheapest home phone service including the different types of landlines, features, call quality, customer service, and more.
Keep reading to find the best landline phone service in California .
The cheapest landline phone service in Santa Clara
Best home phone providers in santa clara, how to pick the best home phone service provider, cheapest landline service for seniors in santa clara, compare the best home phone plans, santa clara home phone service faqs.
US Mobile Landline
US Mobile offers landline service with plans starting at $10.
US Mobile Landline Plans
US Mobile offers a great home phone plan with a monthly costs that are very competitively priced and includes taxes & fees. While primarily, a cell phone carrier, their new home phone service is an excellent cost-effective alternative to traditional landline.
- Unlimited talk
- Taxes & fees included
- Get the first month free
- No internet required
- Unlimited calling to 200+ countries
- 24/7 customer service
- Excellent score on Trustpilot
US Mobile offers a cheap home phone plan with unlimited talk in the US, plus unlimited international calling to 200+ countries and 411 numbers. And the great thing is, unlike some VoIP providers, you don't need an internet connection to make use of their benefits.
Operating on T-Mobile's 4G LTE wireless cellular network, rather than a fixed connection, as part of your setup pack, you'll get a US Mobile SIM card and a home phone base and device if selected. As an affordable phone provider, US Mobile sets itself apart from others by providing outstanding customer service, with round-the-clock support available via phone or online chat.
The home phone service operates on one of America's most reliable networks and comes with no activation, cancellation, overage, or daily access fees. There are also no contracts or hidden fees, making the pricing transparent and predictable.
The plan includes voicemail, caller ID, call forwarding, and conference calling at no additional cost. When you purchase their Home Phone Base, you receive one month of service for free. For those who don't already own a cordless handset to use with the Home Phone Base, US Mobile offers a bundle kit priced at $99.99.
Ooma offers landline service with plans starting at $20.
Ooma Landline Plans
The Ooma Telo LTE home phone service is a reliable home phone solution that requires a one-time hardware payment of $129.99 and low monthly pricing.
- Free phone calls within the US
- Free calls to Canada & Mexico
- Transfer your number
- Taxes & fees are extra
- Poor score on Trustpilot
Ooma's cellular home phone service could be helpful if you're in an area with unstable broadband connections, as it operates on the T-Mobile 4G LTE wireless network, not a fixed-line.
It offers several features, such as a 1GB LTE cellular connection for backup internet, a backup battery for power outages, free calling to the U.S., Mexico, and Canada, and a 30-day money-back guarantee.
You can easily transfer your existing phone number over, and because your home phone is using a cellular network, it creates more flexibility, so you can use the Ooma app to make and receive incoming calls wherever you are.
Community Phone Landline
Community Phone offers landline service with plans starting at $39.
Community Phone Landline Plans
Community Phone offers affordable wireless landline services - no internet service is required as it operates on the T-Mobile 4G LTE wireless network.
- Unlimited nationwide calling
- Works without power
- Keep your existing number
- Easy to setup
- Scores excellent on Trustpilot
- More expensive than others
With unlimited local and long-distance calling, Community Phone plans offer something for all landline needs. You can also easily bring your existing landline number, and it's a quick 30-second setup
Operating on cellular networks gives you more flexibility than with a traditional landline, and if there's a power cut, a battery backup can keep you connected for up to 12 hours.
The main drawback with Community Phone is the price, as its monthly price is not as cheap as other competitors.
- Coverage: It's essential to check coverage maps to ensure that the provider has reliable signal strength in your area. This will guarantee good call quality with clear and uninterrupted calls.
- Plan flexibility: When selecting a phone service provider, consider your calling habits and choose a plan that caters to your needs. If you make frequent long-distance or international calls, then look for providers that include that or offer affordable rates. On the other hand, if you mostly make local calls, then prioritize plans with unlimited calls within the US. Additionally, some providers offer plans with features like call waiting, voicemail, and caller ID, which may be important to you, depending on your requirements.
- Pricing: When looking for landline services, it's important to compare pricing to ensure that you're getting a good deal. Many major providers only offer a telephone service when bundled with TV or Internet. But there's no need to bundle your home phone services and pay over the top for features you don't want.
- Contracts: Signing up for long-term contracts may mean you have to pay early termination fees if you decide to switch providers, which can be quite costly. With short-term or contract-free plans, you have the freedom to switch providers whenever you want without incurring any additional fees.
- Advanced features: Look for features such as voicemail, call waiting, caller ID, and 3-way calling that can enhance your calling experience. Voicemail allows you to receive messages when you're unavailable, while call waiting notifies you of incoming calls when you're on another call. Caller ID helps identify the person calling, and 3-way calling enables you to speak with multiple people at once.
- Customer service: When choosing a product or service, it's important to look for good customer service to ensure that you'll receive prompt assistance when needed. Excellent customer service can make all the difference in resolving issues and ensuring you feel valued.
- Equipment costs: You may need to consider any equipment costs associated with the service. This may include purchasing a home phone base station, which can add to the overall expenses. Make sure that these costs fit within your budget before making a decision. However, many providers allow you to bring your own cordless phone, which can help save on equipment costs. Keep in mind that certain types of phones may not be compatible with all home phone services, so it's worth checking with the provider beforehand.
- International calling plans: If you have loved ones residing outside the United States and your calling plan doesn't include international calls, it's advisable to check the rates for international destinations. Some service providers offer inclusive international calling features or add-ons that can help you save money on long-distance calls.
- Bring your existing phone number: When switching to a new service provider, confirm if they allow the transfer of your existing home number. Not all providers offer this feature, so you may have to choose a new phone number if the option isn't available. However, many providers do offer number porting services, which can make the transition to a new provider seamless and hassle-free.
Compare landline phone providers by ZIP code to make sure you find the best deal.
Home phone service coverage map in Santa Clara
The FCC collects coverage data, which only offers an approximate indication and doesn't account for indoor coverage. The actual speed and performance can vary depending on your location and device. The reception you experience is influenced by local conditions and elements like natural and artificial physical features in your area.
Find the best landline providers by ZIP code
Many landline providers offer discounts or special plans for seniors in Santa Clara. These plans may include lower monthly rates, free or discounted long-distance calls, caller ID, and other features that can meet the needs of seniors.
The Government's Lifeline program offers phone service discounts to eligible low-income customers, including seniors. The program is available in most states, and eligible customers can receive a discount on their landline or cell phone service.
Find other phone services in Santa Clara
- Internet service in Santa Clara
- Landline service in Santa Clara
- Phone coverage in Santa Clara
- Phone plans in Santa Clara
- SIM cards in Santa Clara
What is the cheapest home phone plan in Santa Clara?
US Mobile offers the cheapest home phone plan in Santa Clara. US Mobile home phone is available for $9.99 per month, where you only pay the initial equipment cost plus fees and taxes.
What is the best landline phone service available in Santa Clara?
US Mobile currently offers the best value home phone service in Santa Clara, with plans starting at $9.99 per month.
Can I get a landline without internet in Santa Clara?
Yes, landline without internet is available in Santa Clara from US Mobile, Ooma & Community Phone.
What does landline cost in Santa Clara?
The cost of home phone service in Santa Clara starts at $9.99 per month with US Mobile, with a one off cost of $49.99 for the initial equipment.
Are traditional landlines still available in Santa Clara?
Traditional landline is still available in Santa Clara but only when bundled with internet service, which can cost in excess of $60 per month.
The best landline service comes down to your needs but there are plenty of ways to save money on your home phone service.
Taking advantage of promotions, discounts, and deals, and cutting down on unnecessary features can help you cut costs. You can also bundle your landline service with cable tv service and high-speed internet.
Making sure to compare providers available in your area and check customer reviews to find the best home phone service provider for you.
SIP vs. VoIP Is a False Choice – Most Modern Business Phone Systems Use Both
If you’re in the middle of researching a new phone system for your business, you may have come across the terms SIP and VoIP and thought that you might have to choose between one or the other, but that’s actually not the case. In reality, most modern communications solutions utilize both SIP and VoIP technologies together.
When figuring out which kind of solution is right for you, it’s important to know more about what SIP and VoIP are so you can select a phone system that does exactly what you need it to do.
A Closer Look at SIP vs. VoIP
Today’s cloud-based phone systems typically use both SIP and VoIP technologies in a way that may seem indistinguishable to the naked eye, but upon closer inspection, you’ll see that these two elements serve very different individual functions.
SIP (Session Initiation Protocol) , for example, is a signaling protocol that allows your business’s desk phones, cell phones, softphones, video conferencing equipment, and other endpoints to locate each other on a shared IP network.
You can also think of SIP as a phone operator that connects all your devices for communication. It acts as a coordinator, enabling your cell phone, office phones, and computers to find each other and make calls possible. Just like an old-fashioned operator physically connecting calls by plugging cables into a switchboard, SIP sets up the call in a digital way.
VoIP (Voice over Internet Protocol) , on the other hand, is used to transmit voice communications over a network that’s based on Internet Protocol, such as the public internet. It works by converting analog voice signals into digital data packets that can then be sent over a data network instead of traditional telephone lines.
When put together, SIP helps establish the call session, and then VoIP takes care of the rest—it encodes your voice into data packets at one end, transmits these packets over networks, and then decodes them back into an audible voice on the receiving end.
To put it simply, SIP handles the connection between your communication devices, and VoIP ensures the transportation and delivery of your voice across a network.
How SIP Works
When you make a voice or video call using a modern phone system, SIP is the first thing that comes into action while setting up your call session.
Whenever you make a call, your desk phone or softphone sends an “invite” message via SIP to the recipient you’re calling. Then, intermediary SIP proxy servers step in to route and relay your invite message to its intended destination.
The SIP then helps the two phones or endpoints negotiate which voice or video encoding methods (codecs) they both have available. These codecs compress audio and video signals so they can be transmitted efficiently over a network. Older or basic endpoints may only support basic codecs, while newer ones support more advanced codecs that provide better quality.
Anyway, once the receiving phone or device accepts the invite, a direct media connection is established between the two endpoints through VoIP. Finally, when the call is over, a termination message is sent via SIP to conclude the session.
Some of the essential components within a SIP network include:
1. SIP Clients: These are the devices used by individuals who want to communicate, such as IP phones, softphones, and mobile apps.
2. SIP Proxy Servers: an SIP proxy server acts as an intermediary server. It receives SIP requests and determines the most suitable route for forwarding them. These proxies play a vital role in directing messages to their intended recipients.
3. Registrar Server: This server accepts register requests from SIP clients to update their current location. This ensures that when a call comes in, it can be properly routed to the device’s most recent IP address.
In addition to facilitating communication setup through SIP signaling, there are other protocols involved in transporting actual chat, voice, or video media data:
1. RTP (Real-time Transport Protocol): Once a SIP call is established, RTP takes charge of transporting the actual media content.
2. SDP (Session Description Protocol): SDP defines and describes the specific details of streaming media sessions.
Altogether, while SIP manages signaling and setting up your calls, additional protocols like RTP and SDP handle the transportation and management of media streams once the two endpoints are connected.
How VoIP Works
VoIP technology enables real-time transmission of voice and video calls over IP data networks.
From a technical standpoint, your VoIP desk phone is equipped with a microphone and speaker, along with a codec chip that converts your analog voice into data packets that are suitable for internet transmission. These packets are encoded and compressed using advanced audio codecs like G.711, G.729, or Opus, which optimize them for efficient network transmission.
Once digitized, these data packets travel through various network paths on the internet until they reach the intended recipient’s phone or endpoint device.
Here, some of the additional protocols come into play during this process as well. For instance, SRTP encrypts the packets to ensure their security, while RTP sequences and timestamps them to enable smooth reconstruction at the receiving end.
Finally, once the digital packets have been sent, the receiving VoIP phone uses these packet headers to reassemble and decode them into an analog audio signal that can be heard through the handset speaker.
Buying SIP vs. VoIP Services
You should have a pretty good idea of how SIP and VoIP work together at this point, but there’s still one big factor to consider: the cost. There isn’t a lot of information out there on how to buy a VoIP system , so it can be difficult to determine what your monthly costs should look like.
Pricing for these solutions depends on several factors, so it’s important to have a breakdown of the costs involved and what variables will impact the total price tag.
SIP Trunk Services
You may already be familiar with the PBX vs. VoIP debate. That said, if you don’t want to rely on traditional phone lines, then one option you have for your business is a SIP trunk service.
SIP trunk services deliver both incoming and outgoing calls over your IP network using SIP. They offer virtual “lines” that can either replace or enhance traditional PSTN phone lines.
With a SIP trunk service, your existing PBX (private branch exchange) system can connect to the public phone network through SIP instead of through regular telephone lines.
When it comes to costs, the price of a SIP trunk service is usually based on the number of concurrent call paths or “seats” you need. Some of the other factors that influence the overall cost may include:
- The quantity of DID (Direct Inward Dialing) numbers
- The types of calls and emergency services
- The amount of bundled minutes versus metered calling
VoIP Phone Services
A VoIP phone service provides a complete phone solution powered by VoIP technology—this means there are no traditional telephone lines involved, so your outbound calls, inbound direct inward dialing (DID) numbers, and fax lines are all delivered via VoIP.
Pricing for VoIP phone services is typically based on factors like the number of lines/DIDs, the number of users, and the calling plans you need based on metered usage or bundled options. The availability of VoIP technology in different geographic locations and the type of phone numbers you need (toll-free or local) may also impact the costs.
Unified Communications as a Service (UCaaS)
Finally, UCaaS platforms are another great cloud-based communication option for enterprise-sized businesses. These platforms typically include your entire business phone system, along with added features like video conferencing, team messaging, contact center capabilities, and collaboration tools.
Since UCaaS replaces your entire on-premises phone system, the pricing is often determined by the number of user licenses or seats you require. Advanced features such as automated attendants, call recording, and AI can also impact costs.
Factors That Will Impact Your Final Cost
Given all of the options at your disposal, determining your total cost will depend on tallying up all of the features and optional variables that will affect your bottom line—including the one-time upfront costs and the recurring monthly costs.
Keep these factors in mind:
- The number of user licenses you need
- Your desired call capacity and whether or not you want the ability to handle multiple calls simultaneously
- The geographic coverage needed for businesses operating globally
- Certain advanced features, such as call recording and AI call attendants
- The service tier and uptime guarantees offered by the provider
- The availability of mobile and desktop capabilities
The pricing for these services can generally range from less than $10 per user per month to hundreds per user per month, depending on the item. However, many SIP and VoIP providers structure their pricing based on different tiers of functionality.
Our Recommended VoIP Providers
It’s no secret that the VoIP market is crowded, and it can be difficult to figure out which are the best business VoIP phone services . If you need help narrowing down your search, we recommend taking a look at Nextiva , RingCentral , and Ooma first.
Nextiva stands out due to its reliable connectivity, affordable pricing, and user-friendly interface. It’s a solid choice for companies that prioritize things like customer service, the flexibility to transfer existing numbers, and dedicated call center features.
RingCentral is another excellent choice for big businesses that require unlimited scalability and global capabilities. It offers advanced call management tools, support for international calling, and a wide range of integration options.
Lastly, Ooma is more suitable for smaller companies with on-site employees who prefer to utilize their existing phones or hardware. It provides a user-friendly platform with a quick setup process and plenty of essential call-routing features that many small and medium-sized businesses need.
Regardless of the solution you choose, investing in a cloud-based phone solution ensures that everyone in your business can collaborate and stay connected without having to rely on traditional PBX technology.
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Person in distorted voice: Congratulations, your Ooma system is up and running. Now you can call anyone, anytime, anywhere in the US, and pay absolutely nothing. As a new customer, you get a free preview of Ooma Premier. Our bundle of enhanced calling features designed to make your home phone service fires on all cylinders: check out multi-ring, personal and community blacklist, virtual phone numbers, voice mail forwarding, and more. See what you've been missing from your old phone company. While you're at it be sure to also visit MyOoma at my.ooma.com . This is your one stop destination for all things Ooma. Here you can: listen your voice mail, view call log, customize your calling preferences and prepay for international calling. If you need us, we're here to help. You can acccess customer support on the web at ooma.com/support or live at the telephone at 888-711-6662. Once again, Thanks for choosing Ooma. Let freedom ring.
Person in clear voice: Congratulations, your Ooma system is up and running. Now you can call anyone, anytime, anywhere in the US, and pay absolutely nothing. As a new customer, you get a free preview of Ooma Premier. Our bundle of enhanced calling features designed to make your home phone service fires on all cylinders: check out multi-ring, personal and community blacklist, virtual phone numbers, voice mail forwarding, and more. See what you've been missing from your old phone company. While you're at it be sure to also visit MyOoma at my.ooma.com . This is your one stop destination for all things Ooma. Here you can: listen your voice mail, view call log, customize your calling preferences and prepay for international calling. If you need us, we're here to help. You can acccess customer support on the web at ooma.com/support or live at the telephone at 888-711-6662. Once again, Thanks for choosing Ooma. Let freedom ring.
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Looking for home phone service in Santa Clara, California? You've come to the right place! Santa Clara is a vibrant and bustling city located in the heart of Silicon Valley. With its close proximity to technology giants like Apple, Google, and Intel, Santa Clara offers a unique and exciting environment for both work and play.
One of the prominent industry headquarters that calls Santa Clara home is none other than Intel Corporation. This global technology company has a significant presence in the city, contributing to the thriving tech scene that Santa Clara is known for.
But it's not all about technology in Santa Clara. The city is also home to the de Saisset Museum, a hidden gem for art aficionados. The museum houses a diverse collection of contemporary art and boasts a beautiful campus that is worth exploring.
Let's not forget about Santa Clara's historical significance either. Did you know that the city was founded in 1777? Its rich history can be seen in the beautiful Mission Santa Clara de Asis, which was established in 1777 and serves as a reminder of Santa Clara's past.
If you're looking to experience Santa Clara's liveliness, be sure to check out the annual Santa Clara Art & Wine Festival. This popular event showcases local artists, delicious food, and of course, fantastic wines. It's a great way to immerse yourself in the local community and enjoy all that Santa Clara has to offer.
Now, let's talk about Ooma, the home phone service provider that can enhance your Santa Clara experience. With Ooma, basic service is free, just pay the monthly taxes and fees. Plus, you can enjoy free calling not just in Santa Clara, but throughout California and the entire United States. And if you have friends and family abroad, Ooma offers low international calling rates.
Even when you're away from home, you can still take advantage of Ooma's phone features with the Ooma Home Phone app. With this app, you can make and receive calls as if you were at home, keeping you connected wherever you go.
So why wait? Contact Ooma today for more information and start enjoying high-quality, affordable home phone service in Santa Clara.
Santa Clara home phone service FAQs
Many individuals are looking to residential VoIP options like Ooma as a landline alternative. Even with the rise of mobile use, millions of Americans still want to keep a home VoIP phone for several reasons. Here are a few common ones:
- Call blocking : Landlines are notorious for pesky telemarketing calls. Ooma’s powerful customizable system blocks more than 1 million telemarketing calls each month, something you typically can’t get with landline service.
- Call quality : Ooma’s PureVoice technology ensures that calls are always crystal-clear. And, Ooma’s HD capabilities capture twice as much audio content compared to landlines.
- Pricing : Ooma’s Basic Service lets you make unlimited nationwide calls for free (all you pay are taxes and fees), while Ooma’s Premier Service costs less than $10 per month, plus applicable taxes and fees. Compared to landlines, you can save thousands per year by making the switch.
Ooma really is the “smartphone for your home” – check out all of our features, benefits and service plans.
Yes. Ooma’s VoIP service has been tested to show no connectivity problems when customers use Starlink as their internet service provider.
Yes, you can still get a landline in California. However, landline phone service monthly rates can be expensive, due to a combination of old, expensive-to-maintain copper infrastructure and providers turning toward new technologies like VoIP. You can save thousands per year by switching to VoIP for your home phone service. Ooma home phone service lets you make unlimited nationwide calls for free; all you pay are applicable taxes and fees.
Yes! Keeping your old phone number is easy with Ooma. All you have to do is log in to your My Ooma account, navigate to the Add-Ons tab and select the Number Port option. You’ll next have to provide some information, including the number you want to port, the type of phone number it is and the type of internet service you have. Next, you’ll need to fill out an online Letter of Authorization (LOA) form, which lets Ooma begin the number porting process from your old service provider. There are some things to keep in mind before you port: Do not cancel your old phone service before your number is ported. If you do, your old provider could put your phone number back into the pool of available numbers before Ooma has a chance to transfer it. Number porting with Ooma has a one-time fee of $39.99. However, this fee is waived if you subscribe to one year of Ooma Premier service. Ooma Premier is $9.99 a month and comes with advanced features like Enhanced Caller ID and the ability to block telemarketers, robocalls and spammers. Note: Porting phone numbers from area codes in Hawaii, Alaska and Puerto Rico has an annual charge of $29.99 per year. This annual fee is waived for Ooma Premier members.
Yes! You can still use 911 without a landline. Using 911 with Ooma is easy. When you register your Ooma Telo device, you must provide a valid street address. This location is used as your service address, so if you dial 911 emergency response professionals will be able to locate you. It’s important to keep your service address updated if you move so that emergency personnel can quickly reach your location if needed.
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Autumn Statement 2023 (HTML)
Updated 30 November 2023
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- Presented to Parliament by the Chancellor of the Exchequer by Command of His Majesty
- November 2023
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In January 2023 the Prime Minister set out three economic priorities: to halve inflation, grow the economy and reduce debt. Consumer Prices Index (CPI) inflation has now more than halved from a peak of over 11% last autumn to 4.6% in October 2023. The economy has recovered from the pandemic more quickly than first thought, grown more than expected this year, and is forecast to grow in every year of the forecast period. Underlying debt is forecast to fall as a proportion of GDP from 2027-28 and the government has greater headroom against its fiscal rules than at Spring Budget 2023.
The government must continue to bear down on inflation, and the Office for Budget Responsibility (OBR) forecasts that government policies in the Autumn Statement will reduce inflation next year. With inflation falling and the economy and public finances stabilised after a series of unprecedented shocks, the government can now take the long-term decisions necessary to strengthen the economy and build a brighter future.
The government is focusing on five areas: reducing debt; cutting tax and rewarding hard work; backing British business; building domestic and sustainable energy; and delivering world-class education. The Autumn Statement takes a responsible approach to public spending to keep debt falling, cuts taxes for working people and businesses, reforms welfare to help people into work and removes barriers to business investment to boost growth.
The OBR estimates that government decisions at the Autumn Statement will boost business investment by £14 billion and bring a further 78,000 people into employment by the end of the forecast period. This means that the combined impacts of the Spring and Autumn policy measures will increase the number of people in work by around 200,000 by the end of the forecast.
Together, Autumn Statement policies are forecast to increase the economy’s potential output in the medium term by 0.3%. This is in addition to a 0.2% increase to potential GDP resulting from announcements at Spring Budget 2023. These are the two largest increases to labour supply and potential GDP resulting from fiscal policy the OBR has ever scored in a medium-term forecast.
Reducing debt and borrowing is essential to controlling inflation, keeping mortgage rates affordable and funding public services sustainably. After accounting for decisions at the Autumn Statement, borrowing is forecast to be lower this year, next year and on average over the forecast period compared to the OBR’s March forecast. Underlying debt is also lower as a percentage of GDP, by an average of 2.1 percentage points across the forecast.
The government is on track to meet its debt and borrowing fiscal rules with greater headroom against both rules compared to spring. Underlying debt begins to fall from 2027-28 and then falls to 92.8% of GDP in the target year (2028-29). The debt rule is met with £13 billion headroom, double the £6.5 billion held in spring. The borrowing rule is met three years ahead of target and with £61.5 billion headroom, an increase of £22.3 billion since the spring.
The government has taken difficult but necessary decisions to get debt falling and ensure our public services continue to operate effectively in the face of financial and operational pressures. The Autumn Statement reaffirms the commitments made at Autumn Statement 2022 to make available up to £14.1 billion for the NHS and adult social care and provide an additional £2 billion for schools in both 2023‑24 and 2024-25. Total departmental spending will be £85 billion higher in real terms by 2028-29 than at the start of this Parliament (2019-20). As a proportion of income, households on the lowest incomes have benefited the most from government decisions on tax, welfare and public spending since Autumn Statement 2022.
Tackling waste and inefficiency has always been at the heart of the government’s approach to public spending, but high inflation continues to put additional pressure on departmental budgets. The government has therefore driven even greater efficiencies than those assumed at Spending Review 2021 to manage down these pressures and ensure departments can live within their settlements and deliver the service outcomes the public expect.
The government continues to tackle tax non-compliance and is introducing the largest package of measures since 2016. This is forecast to raise an additional £5 billion of tax revenue over the next five years, which would otherwise have gone unpaid, to fund vital public services.
While day-to-day spending will continue to grow above inflation in future years, public spending faces many pressures. The government must get the most out of every pound of taxpayers‘ money by boosting productivity and focusing spending on the government’s priorities. The government continues to drive forward the Public Sector Productivity Programme to reimagine the way public services are delivered.
Cutting tax and rewarding hard work
The government has had to take difficult decisions to restore the stability of the public finances in wake of the economic shocks caused by the COVID-19 pandemic and Putin’s illegal invasion of Ukraine. But with inflation falling, growth more resilient than expected this year and debt forecast to reduce, the government can now return some of that money to taxpayers and ensure people keep more of what they earn.
The government is cutting taxes for over 29 million working people. The main rate of Class 1 employee National Insurance contributions (NICs) will be cut from 12% to 10% from 6 January 2024, with employees benefitting from January onwards. This means the average worker on £35,400 will receive a tax cut in 2024-25 of over £450. This will reward work and sustainably grow the economy, providing a combined rate of income tax and NICs for an employee paying the basic rate of tax of 30% – the lowest since the 1980s.
The government is also cutting taxes for the self-employed from 6 April 2024. The government is reducing the main rate of Class 4 self-employed NICs from 9% to 8%, and will abolish the outdated and needlessly complex Class 2 self-employed NICs, reforming and simplifying the tax system. Taken together these changes will benefit around 2 million self-employed individuals and result in an average self-employed person on £28,200 saving £350 in 2024-25.
These tax cuts are part of the government’s long-term strategy for growing the economy and getting more people into work, ensuring that the UK has the labour market it needs for its future. The OBR forecast these changes will increase the number of people in employment by 28,000 by 2028-29, alongside a further substantial economic benefit from those in work increasing their hours.
The government is delivering on its commitment to end hourly low pay. From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 with the age threshold lowered from 23 to 21 years old. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
The government is reforming the welfare system so it better supports people into work where they are able, focusing on the long-term sick and disabled, and long-term unemployed. The government’s Back to Work Plan, supported by over £2.5 billion in funding over the next five years, is an ambitious new programme to help people look for and stay in work, manage their health conditions, and stem the flow into sickness related inactivity.
There are now a record 2.6 million people who are economically inactive due to long-term sickness and disability, almost half a million more than before the pandemic. The government is taking steps to reform the fit note process to support more people to resume work after a period of illness and expanding the Universal Support programme that matches those with health conditions and disabilities into vacancies. The government is also expanding the NHS Talking Therapies programme and Individual Placement and Support to help people with mental health conditions. The government will work with employers and business representatives to develop and promote best employment practices to support employees with health and disability issues.
The government is reforming the Work Capability Assessment (WCA) so that more individuals, such as those with limited mobility and mental health conditions, receive the right support to find work where they can, rather than being automatically deemed unable to work or look for work.
To better help the long-term unemployed into work, the government is expanding Additional Jobcentre Support, extending and expanding the Restart programme in England and Wales, and strengthening sanctions for those who choose not to engage with measures that help them find work.
For those that cannot work for legitimate reasons there must always be a safety net. The government will uprate all working age benefits for 2024-25 in full, by September 2023 CPI inflation of 6.7%, and will continue to protect pensioner incomes by maintaining the Triple Lock and uprating the basic State Pension, new State Pension and Pension Credit standard minimum guarantee for 2024-25 in line with average earnings growth of 8.5%.
In response to the energy crisis, the government provided one of the largest support packages in Europe. To further support low-income households with increasing rent costs, the government will raise Local Housing Allowance rates to the 30th percentile of local market rents in April 2024. This will benefit 1.6 million low-income households, who will be around £800 a year better off on average in 2024-25. Taken together, support to households to help with the high cost of living is worth £104 billion over 2022-23 to 2024-25, or £3,700 per household on average.
Backing British business
When the economy is growing there are more jobs, higher wages and increasing living standards. Since 2010 the UK economy has grown the third fastest in the G7, faster than France, Germany, Japan and Italy. Unprecedented shocks have hit the economy since 2020, but with stability restored, the government is backing British business to drive long-term economic growth.
The government believes the best way to grow the economy is not through higher borrowing and untargeted support but by creating the conditions for the private sector to thrive by removing barriers to investment and cutting taxes for businesses.
Business investment in the UK has been lower than other leading advanced economies at 9.5% of nominal GDP over the last 10 years, compared to 11.2% on average in France, Germany and the US. Addressing this gap is crucial to improving UK productivity and so the government is introducing an ambitious package of measures to unlock business investment.
The UK already has one of the most competitive business tax regimes of any major economy, with the lowest headline rate of corporation tax in the G7. In 2021, the government introduced the super deduction to incentivise business investment. Since then, investment growth has been faster in the UK than any other country in the G7. At Spring Budget 2023 the government went further, replacing this with full expensing for three years from 1 April 2023, allowing businesses to write off the full cost of qualifying plant and machinery investment.
The government is now making this change permanent. Worth over £10 billion a year, full expensing is the biggest business tax cut in modern British history. This makes the UK’s capital allowances regime one of the most generous in the world, and the OBR expect this will unlock an additional £14 billion of investment over the forecast period. This will improve the UK’s capital stock, help close the productivity gap and drive sustainable growth. The government is also making changes worth £280 million a year to simplify and improve R&D tax reliefs, helping to drive innovation in the UK.
The government is removing barriers to investment in critical infrastructure by reforming the planning system to speed up approvals and setting out a plan to reduce the time it takes for new projects to connect to the grid. Together these reforms will unlock new commercial developments that will enhance our energy security and help drive the transition to net zero.
The government is announcing a business rates support package worth £4.3 billion over the next five years to support small businesses and the high street. The small business multiplier will be frozen for a fourth consecutive year, and Retail, Hospitality and Leisure (RHL) relief will be extended, ensuring the most vulnerable businesses continue to be supported. The standard rate multiplier will be uprated in line with CPI inflation. While this will increase business rates bills for some, large retailers are expected to benefit from hundreds of millions of pounds of tax relief per year as a result of full expensing.
Businesses need access to capital to grow and invest in the UK. The Autumn Statement builds on the Chancellor’s Mansion House speech with a package of measures to reform the pensions market to unlock investment into high growth sectors and generate increased returns for savers.
The government continues to back the growth sectors of the future and is announcing further targeted support for digital technology, green industries, life sciences, advanced manufacturing and creative industries. This includes making available £4.5 billion to unlock investment in strategic manufacturing sectors – auto, aerospace, life sciences and clean energy – which are developing cutting edge technology and driving our transition to net zero. Together with existing manufacturing support and decarbonisation plans, this funding will level up communities across the country with higher-paid jobs, improve the UK’s energy security, and help grow the sectors of the future.
The government is delivering on levelling up and announcing further measures to support growth and investment across the UK, including confirming the next set of investment zones in Greater Manchester, the West Midlands, and the East Midlands; and doubling the flexible funding envelope for each investment zone from £80 million to £160 million by extending the programme and associated tax reliefs from five to ten years.
Together with submitted plans for investment in regulated utilities, the Autumn Statement measures could raise business investment by around £20 billion per year in a decade’s time.
The long-term decisions taken at the Autumn Statement keep debt falling, cut taxes and reform welfare to reward hard work, and unlock billions of pounds of business investment to drive sustainable growth.
Economic and Fiscal Outlook
In January 2023 the Prime Minister set out three economic priorities: to halve inflation, grow the economy and reduce debt. The latest Office for National Statistics (ONS) data and forecasts from the Office for Budget Responsibility (OBR) show: [footnote 1]
- Inflation is less than half its peak. Responsible decisions taken by the government to limit borrowing have supported the Bank of England in its action to bring inflation down; [footnote 2]
- Economic growth has been resilient, and the economy is now expected to grow in every year of the forecast period. Revisions to gross domestic product (GDP) show that the UK economy recovered more strongly from the pandemic than previously thought;
- Debt is forecast to fall as a proportion of GDP over the medium term, with greater headroom than at Spring Budget 2023.
The government must continue to bear down on inflation, and the OBR forecasts that government policies in the Autumn Statement will reduce inflation next year. With inflation falling and the economy and public finances stabilised after a series of unprecedented shocks, the government can now take the long‑term decisions necessary to strengthen the economy and build a brighter future.
The government is focusing on five areas: reducing debt; cutting tax and rewarding hard work; backing British business; building domestic and sustainable energy; and delivering world class education. The Autumn Statement takes a responsible approach to spending to keep debt falling, cuts taxes for working people and businesses, reforms welfare to help people into work and removes barriers to business investment to boost growth.
The OBR has revised up its forecast for growth this year, and the economy is now expected to grow in every year of the forecast period. The OBR estimates that government decisions at the Autumn Statement will boost business investment by £14 billion and bring a further 78,000 people into the labour market by the end of the forecast period. Together, these measures increase the economy’s potential output in the medium term by 0.3%. This means that the policy measures announced at Spring Budget 2023 and this Autumn Statement have been assessed by the OBR as increasing potential output by a combined 0.5%, resulting in the two largest increases in potential GDP since it was established.
The OBR’s forecast shows that, compared to Spring Budget 2023, borrowing is lower this year and next, as well as on average across the forecast, and debt as a proportion of GDP is lower in every year. The government has met its borrowing and debt rules with improved headroom in the fifth year of the forecast. Given the stronger fiscal outlook, responsible policy choices at Autumn Statement support lower taxes and long-term, sustainable growth.
A resilient economy and public finances
Growth has been resilient this year.
GDP growth has been more resilient than forecast in the spring. Output grew by a cumulative 0.5% during the first three quarters of 2023. This compares to the OBR’s March forecast for a contraction and was faster than Germany, Italy and the euro area as a whole. Revisions to the National Accounts, explained in Box 1.A, mean that the level of GDP is higher than previously thought. GDP growth has slowed into the second half of 2023 as higher interest rates contributed to a fall in household consumption.
Box 1.A Revisions to GDP
Estimates of GDP are revised as the ONS incorporates more data and improves its methods for measuring economic activity. The most recent revisions have been historically large due to more uncertainty than usual in estimates of GDP during the pandemic.
On 29 September 2023, the ONS published revisions which showed a shallower contraction in GDP in 2020 and a faster recovery in 2021. The level of real GDP was revised up by 2.0%. GDP recovered past its pre-pandemic peak earlier than previously thought. The revisions to real GDP were similarly reflected in higher estimates of nominal GDP. A larger nominal economy than previously estimated helps to explain why tax receipts have been stronger than forecast. Since the pandemic, the UK has recovered more rapidly than Germany and at a similar rate to France.
The revisions to components of GDP were also significant. Box 1.C in the Spring Budget noted public sector output accounted for much of the weakness relative to European peers with private sector output having been more comparable. [footnote 3] The latest data show that public sector output – in particular in the health sector – was much stronger than previously thought, outstripping growth in the private sector. Public sector productivity remains a challenge, lying below pre‑pandemic levels.
The revised data shows that business investment grew nearly twice as fast as previously thought since the pandemic. Business investment as a share of GDP remains relatively low compared to other major European economies. Household consumption was also higher than previously thought between mid 2021 and late 2022, driven by higher than previously estimated real incomes. The household saving ratio has also been revised down since 2021, suggesting consumers saved less to support consumption than previously estimated.
Chart 1.1: Revisions to Real GDP since the pandemic
1 First quarterly estimate, 11 August 2023.
Source: Office for National Statistics, HMT calculations.
Business investment and consumption drove growth in the first half of the year. Growth was broad based across categories of business investment. There are likely to have been some positive effects from measures announced at previous fiscal events, including the super-deduction and temporary full expensing, as expected by the OBR. Quarterly business investment data is volatile and recently has been affected by one-off factors, but remains 4% above its pre-pandemic level.
Aggregate real household disposable income (RHDI) has been more resilient than expected in the spring. High inflation remains a challenge for many households, and this pressure is not spread equally. The costs of high inflation have been offset by stronger-than-expected income growth, thanks in part to government support measures. Instead of falling by 3.5% between Q2 2022 and Q2 2023, as was forecast at Spring Budget 2023, aggregate real incomes rose by 2.7%, surpassing their pre-pandemic level. Rising RHDI meant consumption grew in the first half of 2023.
Inflation has fallen significantly but has been more persistent than expected
The rate of Consumer Prices Index (CPI) inflation has fallen since its peak last autumn of over 11%, and was 4.6% in October 2023. Lower wholesale energy prices have been the main driver of lower inflation, which have reduced the Ofgem price cap for household energy bills. Food and others goods inflation has also fallen, but services inflation remains elevated.
Elevated inflation is a challenge globally and it remains above central banks’ targets in many advanced economies. In the UK, inflation has been more persistent than the OBR forecast at Spring Budget 2023. The OBR has judged that high energy costs since Putin’s illegal invasion of Ukraine have had a more significant impact on inflation than it previously thought. [footnote 4] In addition, domestically driven inflation pressure has proved more significant, due to excess demand in the economy and as wage growth has been stronger than expected. High rates of wage growth have been an important factor in services inflation remaining elevated.
Indicators suggest that recruitment difficulties have eased since the spring. [footnote 5] Vacancies have fallen across almost all sectors of the economy, and the number of unemployed people per vacancy has risen. This loosening in the labour market is expected to lead to slower wage growth over time. Wage growth remains elevated, at 7.9% in Q3, and is above rates consistent with inflation falling to the 2% target. High nominal wage growth has boosted tax receipts.
Labour market data on employment, unemployment and inactivity are currently subject to significant uncertainty. Concerns about data quality – relating to falling response rates – have led to a temporary suspension of the publication of Labour Force Survey (LFS) statistics. The ONS has published alternative experimental estimates, drawing on information taken from outside the LFS. [footnote 6] These estimates indicate that unemployment has risen steadily since the spring to 4.2% in Q3, in line with the OBR’s March forecast. The population estimates which underpin the LFS do not account for demographic changes since mid 2021, and are based on a mid 2021 assumption about total population growth, both of which are affecting current estimates of employment. Other administrative data suggest stronger growth in employees in the last two years than the LFS – employee numbers grew by 1.6 million in the two years to Q2 2023 in real-time PAYE data, compared to 0.6 million in the LFS. The ONS has published a plan to address concerns around the LFS. [footnote 7]
The independent Monetary Policy Committee (MPC) of the Bank of England has responded to high inflation by tightening monetary policy, through raising Bank Rate to 5.25%, from 0.1% in December 2021. [footnote 8] Central banks around the world have also been raising benchmark interest rates. Since the beginning of 2022, the European Central Bank (ECB) has raised interest rates by 4.5 percentage points and the US Federal Reserve by 5.25 percentage points. [footnote 9] , [footnote 10] The global increase in interest rates, necessary to bring down inflation, has weighed on growth in the UK and other advanced economies. Government debt interest costs have also increased as a result.
The government is borrowing less this year than expected in the spring, resulting in lower levels of debt
ONS data shows the government has borrowed less so far this year than implied by the OBR’s March forecast. This mainly reflects stronger-than-expected tax receipts.
The lower level of borrowing, alongside higher-than-forecast nominal GDP, means that public sector net debt (PSND) as a percentage of GDP is lower than implied by the OBR’s March forecast. The OBR forecasts that at the end of 2023-24 PSND will be £2.7 trillion or 97.9% of GDP. Although this remains high by historical standards, the UK is not alone in having an elevated level of debt following recent shocks. As set out in Box 1.B, UK general government gross debt as a share of GDP was the second lowest in the G7 in 2022. [footnote 11]
Box 1.B International fiscal comparisons
The latest International Monetary Fund (IMF) Fiscal Monitor indicates that, in 2022, UK general government gross debt as a share of GDP was lower than all G7 peers other than Germany and the level of UK borrowing as a share of GDP was in line with G7 peers. [footnote 12]
Chart 1.2: General government gross debt of the G7 in 2022
Source: International Monetary Fund, Fiscal Monitor, October 2023.
The government’s priority to reduce debt is aligned with the approach of other advanced economies. Several countries have reaffirmed their commitments to medium-term fiscal sustainability. In Europe, Germany has reimposed its constitutional debt brake, which limits its core budget deficit to 0.35% of GDP, while France has set out commitments to get debt falling over the medium term. [footnote 13] , [footnote 14] The European Commission has consulted on changes to the Stability and Growth Pact, proposing to reintroduce updated debt and deficit rules that have been suspended since the COVID-19 pandemic. [footnote 15] Elsewhere, Canada and Australia have committed to reducing their debt-to-GDP ratios over the medium term. [footnote 16] , [footnote 17]
The IMF forecasts UK borrowing to remain in line with G7 peers and debt to maintain a strong relative position. The OBR’s forecast would put UK borrowing third lowest of G7 countries in 2028-29 (comparing to IMF forecasts for 2028).
Chart 1.3: General government net borrowing of the G7 in 2028
The Office for Budget Responsibility (OBR) forecasts borrowing for the UK in the financial year of 2028-29.
Source: Office for Budget Responsibility and International Monetary Fund, Fiscal Monitor, October 2023.
Long-term decisions for a brighter future
The government is growing the supply side of the economy.
Over the last few years, the economy has been buffeted by a series of shocks, including the pandemic and an energy crisis. In addition to supporting households, the government has responded by prioritising UK energy security, forging new trading relationships and controlling borrowing. Building on Spring Budget 2023, now inflation has halved and as the economy recovers, the government is using the underlying fiscal improvement to tackle long-term economic challenges. The government is prioritising action in five critical areas: reducing debt; cutting taxes and rewarding hard work; building domestic and sustainable energy; backing British business; and delivering world-class education.
UK productivity growth has been subdued in the public and private sectors. This suppresses living standards and makes it more difficult to deliver the funding needed for world-class public services. Weaker growth in business investment has been one of the reasons for slower productivity growth in the UK since the Global Financial Crisis. As shown in Chart 1.4, business investment as a share of GDP is relatively low in the UK compared to other major European economies. Increasing business investment will lead to more capital being available per worker, allowing workers to be more productive and increasing growth and real incomes. Removing barriers to investment in critical infrastructure is necessary to increase Britain’s energy security and support the transition to net zero.
The Autumn Statement aims to boost business investment by introducing measures such as making capital full expensing permanent. The OBR estimates this measure will lead to £14 billion extra business investment over the forecast horizon. The additional business investment increases the capital stock permanently by 0.2%, which in turn increases potential output by 0.1% in 2028‑29. The OBR notes that other measures in the Autumn Statement ‘could also boost business investment particularly over the longer-term’. By making full expensing permanent at the Autumn Statement, the government is recognising the higher short-term fiscal cost of this measure, but this cost will decline over time while the increase to business investment will increase GDP in the long term.
Chart 1.4: Business investment in selected advanced economies(1)
1 GDP and business investment are in current prices.
Source: Organisation for Economic Co-operation and Development and HMT calculations.
Growth depends on the number of workers in the economy, as well as productivity. Labour market participation has improved since the spring, but inactivity has continued to increase among some groups, including those who are inactive due to long-term sickness. Growing the labour supply by helping these people back into work will increase the potential output of the economy. The Autumn Statement builds on the landmark labour market package introduced in the Spring Budget by introducing the Back to Work Plan.
Alongside a welfare system that supports people to work, allowing people to keep as much of their hard-earned money as possible is a priority for this government. As part of the government’s long-term plan to grow the economy it will cut taxes for 29 million working people.
The OBR says these measures will bring 78,000 people into the labour market. Although it is not reflected in the forecast, due to uncertainty around the impacts, the OBR notes that ‘some measures could provide a further boost to labour supply’, such as proposed changes to fit notes.
The OBR confirms that policies announced at the Autumn Statement will increase economic growth. It estimates that the overall effect of these supply-side measures is to boost the size of the economy by 0.3% by the end of the forecast. The OBR’s forecast also reflects long-term demographic and technological changes. The OBR judges that as the population ages, individuals will work for fewer hours on average. Due to the higher proportion of intangible assets in the economy, it assumes capital is being retired at a faster rate than previously. These factors mean that, prior to the impact of policy measures, labour and capital are assumed to grow more slowly than before, which pulls down long-term growth. This further justifies the government’s continued focus on creating growth by boosting the supply side of the economy.
The economy is expected to grow by 0.6% in 2023 and 0.7% in 2024. Growth is then forecast to increase to 1.4% in 2025 and an average of 1.9% between 2026 and 2028 as inflation falls, helping real wages grow more quickly, and as the effect of past interest rate increases fades. The OBR forecasts unemployment to rise to 4.6% in the middle of 2025, as slower GDP growth and higher interest rates weigh on labour demand. Unemployment is then expected to fall back to its structural rate of 4.1% at the end of the forecast horizon.
Managing risks and increasing resilience
Prioritising sustainable growth, repairing the public finances, and an effective risk management framework mean that the government has been able to support the economy through the shocks faced in recent years. The government remains alive to external and domestic risks, including further escalation of Putin’s illegal war in Ukraine, and the conflict in Israel and Gaza. An escalation of that conflict involving the broader region that risks a reduction in energy exports from the Middle East would have material financial market and economic impacts.
The government’s approach to economic and fiscal risk management is at the forefront of international best practice. Alongside Autumn Statement, the government has published its response to the OBR’s Fiscal Risks and Sustainability report. [footnote 18] The response sets out the actions the government is taking to address risks to the public finances, including those examined by the OBR.
The Autumn Statement goes further in building the UK’s capabilities to assess and manage risk. The government will provide up to £10 million of funding over 2024‑25 and 2025‑26 to finance research on risks to the economy and public finances. This will include the understanding of risk impacts, their potential mitigations and response preparations. For the first time, the government has published a report assessing the risks from existing contingent liabilities, as set out in Box 1.C.
Box 1.C Managing risk on the government’s balance sheet
A key area of fiscal risk comes from obligations that the government enters into, such as insurance, provisions and guarantees, known as contingent liabilities. Alongside the Autumn Statement the government has published for the first time an estimate of its overall stock of these obligations and their expected cost, putting the UK at the forefront of international best practice on reporting the fiscal implications of these types of balance sheet intervention. [footnote 19]
This assessment from the Contingent Liability Central Capability (CLCC) - the government’s centre of excellence for the management of guarantees, insurance and contingent liabilities - means the government can now make better decisions about taking risks onto its balance sheet. That is because new risks can be assessed against the existing stock of contingent liabilities for the first time. The CLCC’s expertise, alongside HM Treasury’s robust framework for approving policies that create new liabilities, better equips the government to judge the benefits and risks it takes on, helping to ensure value for money for the taxpayer. To aid transparency, the government will continue to report on the new major contingent liabilities it takes on, as in Table 1.2.
As is already the case for major tax and spending decisions, the government intends to apply in future the principle that new major guarantee or insurance schemes, or major changes to the risk held in existing schemes, are announced at fiscal events, to support the management of these risks as a portfolio across government. The government will retain the flexibility to respond to events to support the economy, households and businesses at any point when needed. This will further support fully-informed decision making that involves new risks and improve the value for money achieved from these schemes.
Responsible fiscal policy is supporting the bank of england in reducing inflation.
Compared to Spring Budget 2023, the OBR forecasts that borrowing is lower on average across the forecast and debt as a proportion of GDP is lower in every year. PSND excluding the Bank of England (underlying debt) peaks at 93.2% of GDP and falls from 2027-28 to 92.8% in the final year of the forecast (2028-29). Headline debt (PSND) as a proportion of GDP falls in every full year of the forecast and is 3.2 percentage points lower across the forecast on average. Before policy decisions at Autumn Statement 2022, the OBR forecast that headline debt would rise to 99.6% of GDP. [footnote 20] Headline debt is now forecast to be 5.5 percentage points lower as a proportion of GDP by the end of the forecast, reflecting a combination of policy and revisions to GDP.
Public sector net borrowing (PSNB) peaks at £123.9 billion (4.5% of GDP) in 2023-24 and then falls until it reaches £35.0 billion (1.1% of GDP) in the final year of the forecast. The current budget is in balance from 2027‑28, reaching a position where day-to-day spending is funded through tax revenues and the government is only borrowing for investment.
Chart 1.5: Public sector net borrowing
Source: Office for National Statistics and Office for Budget Responsibility.
Compared to the March forecast, the OBR forecasts borrowing will be lower in 2024-25 and across the forecast period on average. Underlying improvements to the fiscal outlook have been used to deliver lower taxes and long-term sustainable growth, without adding to borrowing.
Tax receipts have been revised up across the forecast across all the main taxes, reflecting the resilience of the economy and inflation which has driven higher nominal earnings and higher nominal consumption. This increase more than offsets higher spending on welfare and debt interest costs from higher-than-expected inflation and interest rates. The OBR forecasts that debt interest costs will reach £116.2 billion this year (2023-24); £22.2 billion higher than forecast in March. Compared to departmental budgets, debt interest costs for 2023-24 would be second only to the Department for Health and Social Care (Table 2.1), which illustrates the importance of delivering on the government’s commitment to reducing debt.
Table 1.1: Changes in borrowing since March 2023
By increasing employment and investment and increasing the size of the economy, policy has indirect benefits to the public finances. On average, the underlying forecast improvement since the OBR’s March forecast is greater than the combined direct and indirect effects of policy decisions, as shown in Table 1.1.
Reflecting the improvement in the fiscal outlook, the Net Financing Requirement for the Debt Management Office in 2023-24 has been revised down by £10.5 billion, to £232.3 billion compared to the April remit. This decrease is to be met through a reduction in gross gilt issuance this year of £0.5 billion; and a £10.0 billion reduction in the financing raised through Treasury bill issuance for debt management purposes. The government’s financing plans for 2023-24 are summarised in Annex A.
Alongside its focus on fiscal sustainability the government continues to support the MPC in its action to bring inflation down to the 2% target. The government has published the remit for the MPC alongside Autumn Statement, to reaffirm that the MPC’s target of price stability is defined as 2% CPI inflation, which applies at all times.
Responsible decisions on borrowing are a key pillar of government support to the MPC. As set out in Box 1.D, fiscal policy is aligned with monetary policy by withdrawing support at a pace well matched to the strength of the economy. Fiscal policy is adding less to demand than forecast in the spring, as demonstrated by the primary deficit (both adjusted and unadjusted for the economic cycle) being lower in every year of the forecast.
Box 1.D Fiscal stance
Fiscal policy affects growth, inflation and monetary policy because changes in spending and taxation add or withdraw demand to and from the economy. Measures of the level of that impact are called the ‘fiscal stance’; measures of changes in that impact are called the ‘fiscal impulse’.
Estimates of the fiscal stance are usually derived from headline borrowing. PSNB is currently elevated, but is due to fall to 1.1% of GDP in the final year of the forecast. When assessing the fiscal stance, net debt interest costs are often removed from borrowing, as interest payments are not a good measure of stimulus to the economy. In addition, cyclical changes in the economy are accounted for, because, for example, tax revenues will rise temporarily if the economy is running above capacity. These adjustments give the cyclically-adjusted primary deficit (CAPD), shown in Chart 1.6 alongside headline borrowing, which is a useful measure of the fiscal stance.
The CAPD has a downward slope, showing that fiscal support for the economy is being withdrawn consistently over the forecast. This means fiscal policy is helping the MPC to bring inflation back to target. Chart 1.6 shows that fiscal policy is supporting the fight against inflation more so than at the Spring Budget.
The government is taking difficult decisions to repair the public finances, with a negative impulse of 1.0% of GDP on average in the next two years. By the end of the forecast the primary balance reaches a level that is consistent with ensuring that debt falls gradually and sustainably, given the nominal growth rate of GDP and cost of borrowing.
Chart 1.6: Fiscal stance
Inflation is forecast to fall below 3% next year, then sustainably return to target in the medium term.
The OBR forecasts inflation to continue to fall gradually. After reaching a peak of 10.7% in Q4 2022, CPI inflation is expected to be 4.8% in Q4 2023 and fall further to 2.8% in Q4 2024. The OBR expects CPI inflation to average 1.8% over 2025 before returning to the 2% target in the medium term. The OBR says the direct effect of changes to duties at Autumn Statement means CPI is slightly lower in 2024‑25. This builds on the impact government policies have had in helping to bring inflation down, through holding down energy bills under the Energy Price Guarantee (EPG) and cutting fuel duty. The OBR notes a small boost to demand from the government’s policy package, which does not have a material impact on the path of inflation.
High inflation reduces living standards. The OBR expects living standards, as measured by RHDI per person, to fall by 0.8% in 2023-24, before recovering as labour incomes grow faster than inflation. This outlook has improved since Spring Budget 2023. In the year to Q2 2023, RHDI per person was around £800 higher than OBR expected in their March forecast. The OBR’s Autumn Statement forecast shows a fall in RHDI that is half as large as at Spring Budget 2023. The government believes the best way to sustainably improve living standards is to get more people into higher-paid jobs and boost growth, as well as ensuring people keep more of what they earn. The government will continue to provide support to households vulnerable to cost of living pressures. In 2023-24 this includes making Cost of Living Payments and providing £1 billion for the Household Support Fund. From April 2024, rates of the Local Housing Allowance will be increased to the 30th percentile of local market rents to help low income households with housing costs.
The government is keeping spending under control
The government continues to focus on delivering the spending plans agreed at Spending Review 2021. Since those budgets were set, the government has also provided generous funding to ensure key public services continue to deliver. Total departmental spending (DEL) will grow in real terms at 2.6% a year on average over this Spending Review period, and 3.2% a year on average over this Parliament. As a result, total DEL will be around £85 billion higher in real terms in 2028-29 than it was at the start of this Parliament.
Reducing waste and improving efficiency is at the heart of this government’s approach to public spending. The government has therefore driven even greater efficiencies than those set out at Spending Review 2021, and ran an Efficiency and Savings Review last winter to help departments navigate the challenging economic environment and manage pressures caused by high inflation.
Looking forward, higher public sector productivity is necessary to maintain current levels of public service provision without growing the state unsustainably. To tackle this, the Chief Secretary to the Treasury is running an ambitious Public Sector Productivity Programme with all departments to reimagine the way public services are delivered.
The government remains on track to meet its borrowing and debt fiscal rules
Sustainable public finances provide the foundations for economic growth. The government remains committed to fiscal sustainability. The fiscal rules commit the government to reduce borrowing and to get debt falling over the five-year forecast period. The rules require PSND excluding the Bank of England as a percentage of GDP to be falling and PSNB to not exceed 3% of GDP, both by the fifth year of the rolling forecast period.
The OBR has confirmed that the government is on track to meet its borrowing and debt fiscal rules with greater headroom against both rules compared to the spring. Underlying debt begins to fall from 2027-28 and then falls to 92.8% of GDP in the target year (2028-29). The debt rule is met with £13.0 billion headroom in 2028-29, an increase of £6.5 billion since the spring. The borrowing rule is met three years ahead of target and with £61.5 billion headroom, an increase of £22.3 billion since the spring.
The OBR has forecast that the welfare cap will be breached by £8.6 billion in 2024-25. The increase in welfare spending is largely due to more health-related claims for Universal Credit and the government’s decision to provide benefit claimants with more support with the costs of renting private sector housing by increasing the Local Housing Allowance to the 30th percentile in 2024-25. [footnote 21] Nonetheless, the government remains committed to ensuring welfare spending is sustainable in the medium term, as demonstrated by policies announced at Autumn Statement to reduce fraud and error, and reform the welfare system to help people into work.
The government monitors a broad range of fiscal metrics
The Charter for Budget Responsibility includes an aim to strengthen over time a range of measures of the public sector balance sheet, as monitoring these broader metrics helps to ensure that debt is reduced in a sustainable way. [footnote 22] Public sector net worth (PSNW), the total value of the public sector’s assets and liabilities, is expected to be on an improving path as a share of GDP in every year of the forecast. The OBR forecasts PSNW to strengthen from -70.0% of GDP in 2023-24 to -60.0% of GDP in 2028-29, improving faster than underlying debt predominantly due to an increase in the value of government-owned assets. Public sector net financial liabilities (PSNFL), a measure of the financial balance sheet, is forecast to fall from a peak of 83.3% of GDP in 2024-25 to 78.2% in 2028-29.
The government continues to monitor PSND, or headline debt. This is the public sector’s total stock of debt liabilities net of ‘liquid’ assets, it includes the liabilities of the Bank of England and all of its subsidiaries. In recent years, the Bank of England’s Term Funding Scheme and Asset Purchase Facility (APF) have had a large distortive effect on this measure. As the Term Funding Scheme approaches its end, the OBR forecasts PSND and PSND excluding the Bank of England to begin to converge (as shown in Chart 1.7). The sale or redemption of gilts held in the APF also has an effect and after 2026 is the predominant cause of differences between the path of the two measures. When a gilt is sold at a loss the increase in underlying debt is larger than the increase to headline debt.
Chart 1.7: Four measures of the public sector balance sheet
Box 1.e transparency and the asset purchase facility.
The APF is a subsidiary of the Bank of England through which quantitative easing (QE) has been carried out. The APF is indemnified by HM Treasury, so that all profits and losses accrue to HM Treasury. Between January 2013 and September 2022, the APF transferred £123.9 billion of excess cash to HM Treasury. [footnote 23] Since October 2022, HM Treasury has been making cash transfers to the APF to cover losses incurred from higher interest rates, gilt sales and redemptions. [footnote 24]
The eventual lifetime net profit or loss arising from the APF is uncertain and will depend on decisions by the independent MPC and market conditions. Different unwind strategies will impact when losses are incurred but not necessarily change the lifetime profit or loss. Active gilt sales, for example, will incur upfront costs but have the benefit of reducing lifetime net interest costs from carrying gilts on the APF’s portfolio.
Central banks have different arrangements with national treasuries for sharing profits and losses related to QE, and as highlighted by the Organisation for Economic Cooperation and Development, many are now incurring such losses. [footnote 25] Since national governments are the beneficial owners of central banks, asset purchases that were undertaken on central bank balance sheets will ultimately flow through to government finances. Differences in arrangements result in variation in the transparency, time profile and mechanism of how losses materialise and how the fiscal impacts are recorded.
The UK approach of indemnifying the APF is in line with best practice as set out in a recent IMF working paper, relating to several areas of governance, accountability, and transparency. [footnote 26] The indemnity supports accountability by making the costs and risks from large scale asset purchases explicit. Historical and projected income flows made publicly available by the independent OBR provide extensive transparency around the fiscal impact of QE. This is supported by regular reporting by HM Treasury and the Bank of England and the publication of public sector statistics which capture APF impacts.
As set out in Box 1.C, best practice fiscal management requires transparency about the government’s potential obligations. Table 1.2 provides an update on all new significant contingent liabilities taken on since the last update at Spring Budget 2023. The expected loss of these contingent liabilities is £1.3 billion, of which £1.1 billion supports the Government of Ukraine through World Bank guarantees. Other contingent liabilities include the Shipbuilding Credit Guarantee Scheme provided by the Department for Business and Trade and an extension to HM Treasury’s Mortgage Guarantee Scheme.
Table 1.2: Newly-approved contingent liabilities since Spring Budget 2023
Forecast summary, table 1.3: overview of the obr’s economic forecast(1), table 1.4: overview of the obr’s fiscal forecast (% gdp), reducing debt.
Sustainable public finances provide the foundations for economic growth, which is why the government is committed to reducing debt. The government remains committed to fiscal sustainability. It has taken the difficult but necessary decisions to get debt falling and ensure our public services continue to operate effectively in the face of financial and operational pressures.
The OBR forecast shows that, compared to Spring Budget 2023, borrowing is lower on average across the forecast and debt as a proportion of GDP is lower in every year. The government is on track to meet its borrowing and debt rules, with improved headroom in the fifth year of the forecast.
To support these aims, the government continues to focus on delivering the spending plans agreed at Spending Review 2021. It is also taking targeted action against non-compliance in the tax system. Looking forward, the government is committed to reimagining the way it delivers public services through the Public Sector Productivity Programme. This aims to place public spending on a sustainable footing over the long-term and maximise value for the taxpayer.
Spending Review 2021 set UK government departments’ resource and capital Departmental Expenditure Limit (DEL) budgets and the devolved administrations’ block grants from 2022-23 to 2024-25. It took action to repair the public finances following the historic shock of the COVID-19 pandemic and increased departmental spending accordingly.
Since those budgets were set, the government has also provided generous funding to ensure key public services continue to deliver.
- The Autumn Statement reaffirms the commitments made at Autumn Statement 2022 to provide additional support to the NHS and adult social care in England in response to the pressures facing the health service. More detail is provided in box 2.A below.
- The government has announced its ambition to introduce the Advanced British Standard in England, a new Baccalaureate style qualification, which will provide greater breadth of study, improve essential literacy and numeracy skills, and ensure technical and academic education are put on equal footing. The government has also provided additional education funding since Spending Review 2021. Together, additional funding for schools announced since Spending Review 2021 totals more than £2.4 billion in 2023-24, and more than £2.8 billion in 2024-25. [footnote 27] This will bring per pupil funding to its highest ever level in real terms in 2024-25. [footnote 28] At Spring Budget 2023, the government committed to providing an extra £4.1 billion for childcare by 2027-28 to facilitate the expansion of the new free hours offer, which will bring total investment in childcare to over £8 billion. [footnote 29]
Following Putin’s illegal invasion of Ukraine in February 2022 the UK has been at the forefront of the international response. The UK, along with our partners, has implemented one of the most severe packages of sanctions on a major economy, undermining Putin’s ability to fund his illegal war. The UK has also been one of the largest bilateral donors to Ukraine. The UK’s total military, humanitarian, and economic support for Ukraine to date amounts to over £9.3 billion. This includes £4.6 billion in military support over 2022-23 and 2023-24, leveraging support from others and making a crucial difference on the battlefield, and £347 million in humanitarian aid over three years to 2025. [footnote 30] Since February 2022 the UK has played a critical role in providing fiscal support to Ukraine, pledging a total of £4.7 billion to bolster Ukraine’s economy. This includes through World Bank loan guarantees supporting the inception of the IMF’s programme to support Ukraine, as well as through direct bilateral assistance. [footnote 31] This has played a crucial role in supporting the government of Ukraine in withstanding Russian aggression.
Alongside this, the government continues to invest in infrastructure, and will deliver over £600 billion of planned public sector investment over the next 5 years, underpinning our future growth and supporting energy security, Net Zero and our vital public services. In 2024-25, we are investing over £30 billion more in real terms than at the start of this Parliament. [footnote 32]
Total departmental spending (DEL) will grow in real terms at 2.6% a year on average over this Spending Review period, and 3.2% a year on average over this Parliament. [footnote 33]
A focus on improving efficiency and productivity is at the heart of this government’s approach to public spending. Spending Review 2021 set out an ambitious programme to drive out inefficient spend, confirming savings of 5% against day-to-day central departmental budgets in 2024-25, which have been reinvested in priority areas. [footnote 34]
The government has maintained a consistent focus on tackling waste across the public sector to maximise value for money for the taxpayer, building on the functional efficiency programme, which delivered £3.4 billion of audited savings in 2020-21 and £4.4 billion of audited savings in 2021-22. [footnote 35] This work includes:
- Delivering a property sales programme, which has generated more than £1 billion in receipts to be reinvested in improving the government estate. [footnote 36]
- Launching our Roadmap for Digital and Data, which commits to elevating 50 government services to a “great” standard and streamlining access to government services via the One Login and Find a Grant programmes. [footnote 37] One Login is expected to help save over £700 million over the next three years. [footnote 38]
- Passing the Procurement Bill, which consolidated over 350 different procurement regulations and will enable more flexible procurement procedures across government. [footnote 39]
- Setting up a new Public Sector Fraud Authority (PSFA) that aims to put counter-fraud at the heart of decision-making. The PSFA brings a greater focus on counter-fraud performance and outcomes, will provide an increased depth and breadth of support to public bodies, and is using cutting edge analytics and technology to find and stop fraud. In its first year of operation, 2022-23, the PSFA saved taxpayers £311 million. [footnote 40]
- Delivering the Public Bodies Review Programme, to scrutinise the work and effectiveness of arm’s length bodies (ALBs). The programme will deliver savings of at least 5% of ALBs’ day-to-day resource budgets that will be reinvested into frontline priorities. Through this programme the government aims to review 40 public bodies in 2024-25.
- Launching the Government Efficiency Framework (GEF) in July 2023. The GEF will standardise and improve how departments report efficiency savings and puts in place consistent reporting processes and oversight to make sure efficiency savings are delivered. [footnote 41]
Last winter the government also ran an Efficiency and Savings Review to help departments navigate the challenging economic environment and manage pressures caused by high inflation. Departments reprioritised to ensure the government can continue to protect the vital frontline services that matter most to the public.
Box 2.A Additional support for the health service
- The government has provided record levels of funding to the NHS and adult social care in England. At Autumn Statement 2022, up to £8 billion of additional funding was made available. This resulted in a total NHS budget of £162.5 billion for 2024-25 in England, 45% higher than 2018-19 in cash terms. [footnote 42] This level of investment is enabling rapid action to improve urgent and emergency care and tackle the elective backlog, as set out in the recovery plans published in January and February respectively, and the primary care recovery plan published in May. The government built on this support with £200 million of new funding announced in September 2023 to boost NHS resilience and ensure patients receive the care they need this winter.
- The Autumn Statement recommits to the NHS Agenda for Change pay deal announced this year, including the non-consolidated payment for 2022-23, which was paid out from June 2023. [footnote 43]
- The government is taking significant steps to support the long-term sustainability of the health service. The Prime Minister announced in October plans to create the first smoke-free generation, including a historic new law with the potential to prevent up to 115,000 cases of strokes, heart disease, lung cancer and other lung diseases. [footnote 44]
- The government also announced in June an additional £2.4 billion investment over the next five years to back the first ever NHS Long Term Workforce Plan, underpinned by an assumption of labour productivity increasing by 1.5-2% per year alongside the biggest expansion of staff training in NHS history. [footnote 45] Starting with 205 extra medical school places in 2024, the plan will set the NHS in England on the path to double the number of medical school places and almost double the number of adult nursing places by 2031.
- The UK’s security and prosperity are dependent on creating a healthier, safer, and more resilient world, and the World Health Organisation (WHO) plays a key part in that. The government is increasing its core funding to the WHO by £2 million for underfunded priorities such as patient safety, reinforcing the UK as the largest donor of fully flexible funds.
Public Service Pension Schemes (PSPS) are in the process of finalising outcomes of the 2020 valuations, which will determine employer contribution rates for PSPS from April 2024 onwards. These valuations are based on the revised Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate. Following a review of the SCAPE methodology, and the latest OBR forecast of expected long-term GDP growth, HM Treasury confirmed the new SCAPE discount rate of 1.7%+CPI p.a. on 30 March 2023. [footnote 46] The government has committed to providing funding for the increased cost of employer contributions from April 2024 for centrally funded employers.
As confirmed at Autumn Statement 2022, the government is committed to returning to spending 0.7% of Gross National Income (GNI) on Official Developmental Assistance (ODA) when, on a sustainable basis, the government is not borrowing for day-to-day spending and underlying debt is falling. In accordance with the International Development (Official Development Assistance Target) Act 2015, the government will continue to review and confirm each year whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast with spending assumed at around 0.5% of GNI until then. The independent OBR forecasts show that the principles for a return to 0.7% GNI confirmed by Parliament in 2021 have not been met in 2024-25.
Box 2.B The government’s response to the conflict in Israel and Gaza
- Following Hamas’ terrorist assault against Israel on 7 October, the UK has been at the forefront of efforts to provide support in the immediate region and to affected communities in the UK.
- To date, the government has facilitated flights carrying almost 1,000 people to the UK. [footnote 47] The safety of British nationals remains our top priority and the government will continue to look at how it can support those who remain in Israel and Gaza.
2.B.2 UK support to date
2.b.2.1 humanitarian support.
- The UK supports Israel’s legitimate right to defend itself and take action against terrorism but has been clear that all parties must comply with international humanitarian law and take every possible step to minimise harm to civilians.
- Since 7 October, the UK has committed £30 million in additional aid to the Occupied Palestinian Territories – more than doubling our existing aid commitment (£27 million) for this year. [footnote 48] This will allow trusted partners to provide essential humanitarian relief items and services such as food, water, and shelter.
2.B.2.2 Maintaining regional stability
- The UK is focused on working with international partners to help prevent a damaging and destabilising escalation in the region.
- The Royal Navy have deployed a task group to the eastern Mediterranean, supported by the Royal Air Force patrolling the skies – they are working with partners in the region to deter those who may seek to escalate tensions and are monitoring threats to regional stability, including the transfer of weapons to terrorist groups.
- The Foreign Secretary has also announced a package of sanctions against Hamas senior leaders and financiers as part of efforts alongside our allies to disrupt the group’s ability to finance and carry out its acts of terror.
2.B.2.3 Support for affected communities within the UK
- The government recognises the conflict has affected communities both abroad and at home and has been clear that hate crime of any kind will not be tolerated. The UK is a multinational, multi-ethnic, and multi-faith society where our strengths and values are rooted in our culture and our laws. The government is working with local communities throughout the UK in ensuring these values are upheld, and there is support in place for those affected.
- That is why the government has provided £3 million of additional funding this year to the Community Security Trust, an organisation established to protect British Jews from antisemitism and related threats. This funding will be maintained next year, bringing annual protective security funding for the Jewish community for 2023-24 and 2024-25 to £18 million.
- The government is also investing up to a further £7 million over the next three years for organisations like the Holocaust Educational Trust to help tackle antisemitism. This funding will ensure support is in place for schools and universities to understand, recognise, and deal with antisemitism effectively.
Table 2.1: Resource Departmental Expenditure Limits (DEL) excluding depreciation
Table 2.2: capital departmental expenditure limits (del).
The government is confirming the assumption for the future path of departmental spending. This will follow the profile set at Spring Budget 2023. After this Spending Review period, planned departmental resource spending will continue to grow at 1% a year on average in real terms, excluding the funding provided to local authorities in 2024-25 as part of the one-year Retail, Hospitality, and Leisure relief scheme. Departmental capital spending will follow the cash profile agreed at Spring Budget 2023, with new commitments funded in addition to this, including further support for levelling up programmes and business access to finance.
As a result, total departmental spending (DEL) will be around £85 billion higher in real terms by 2028-29 than it was at the start of this Parliament (2019-20). Departmental resource and capital budgets beyond 2024-25 will be set at the next Spending Review.
The government rightly provided unprecedented levels of support in response to the COVID-19 pandemic and the energy crisis. As the economy recovers from these shocks, this extraordinary support should subside accordingly to prevent permanent growth in the size of the state. As such, Total Managed Expenditure (TME), the total amount of money that the government spends through departments, local authorities, other public bodies, and social security, is forecast to fall in each year of the forecast period as a share of the economy. This follows an increase since 2019-20 as illustrated in Chart 2.2.
As a result of decisions at the Autumn Statement, the devolved administrations are receiving over £1 billion in additional funding through the Barnett formula over 2023-24 and 2024-25. The Scottish Government is receiving £545 million, the Welsh Government £305 million, and the Northern Ireland Executive £185 million. [footnote 49]
Chart 2.1: Total Departmental Expenditure Limits (DEL)
Source: HM Treasury and Office for Budget Responsibility.
Chart 2.2: Total Managed Expenditure (% GDP)
Source: Office for National Statistics, Office for Budget Responsibility, and HM Treasury calculations.
Table 2.3: Total Managed Expenditure (TME)
Improving public sector productivity.
While day-to-day spending will continue to grow above inflation in future years, public spending faces many pressures. The government will get the most out of every pound spent by boosting public sector productivity and by focusing spending on the government’s priorities.
The government has already identified significant opportunities in key public services:
- The recently published independent Policing Productivity Review has made a series of recommendations to improve police productivity. These proposals range from building on recently introduced measures that cut unnecessary bureaucracy to driving greater productivity through the adoption of new and improved technology. If all of these were implemented, they could save up to 38 million hours of police officer time per year, the equivalent of an additional 20,000 police officers. [footnote 50]
- The NHS Long Term Workforce Plan will help deliver a more productive NHS and is underpinned by an assumption of 1.5-2% per annum growth in labour productivity over the next 15 years. This includes a more preventative model of care being provided further upstream and closer to home. Over the period of the Plan the total community workforce will nearly double in size to enable more care to be delivered outside of hospital settings. The Plan will also mean NHS staff working and training in different ways, building broader teams with flexible skills, as well as having the right skills to make full use of new technology that reduces the time for administrative tasks and gives clinicians more time to care. The NHS will also take advantage of opportunities that innovation and technology can offer, including identifying where AI can be used to automate administrative tasks, as well as improving the accuracy and efficiency of diagnostic tools.
Building on this, the Public Sector Productivity Programme has focused on:
- Creating a modern and efficient public sector workforce. As a first step, the size of the Civil Service has been capped. The Civil Service, excluding devolved administrations, has grown by around 66,000 since 2019; capping headcount at current levels could save up to £1 billion by March 2025. [footnote 51] To go further after the current Spending Review period, government departments will be asked to produce plans to reduce the size of the civil service to pre-pandemic levels by the end of the next Spending Review period.
- Reducing the amount of time our key frontline workers, including police, doctors, and nurses, spend on administrative tasks. Some frontline workers can spend at least 8 hours per week on administrative tasks. Reducing this could allow frontline workers to spend more time supporting patients, pupils, and delivering for the public.
- Embracing the opportunities presented by making greater use across the public sector of cutting-edge technology like Artificial Intelligence (AI). The potential productivity benefits from applying AI to routine tasks across the public sector are estimated to be worth billions. As part of this, the Deputy Prime Minister recently announced a new Incubator for Artificial Intelligence, an elite team of technical experts at the heart of government that will help departments to harness the potential of AI to improve lives and the delivery of public services.
- Strengthening preventative action to reduce demand on public services, by ensuring that the government intervenes early to prevent problems arising and, in turn, reduces the chance of these problems becoming embedded. This will build on a number of prevention-related pilots currently funded through the Shared Outcomes Fund, such as trialling workplace health checks to spot early signs of heart disease and testing new models to improve access to specialist support in primary schools for neurodiverse pupils. [footnote 52]
Alongside this, the audit of Equality, Diversity, and Inclusion (EDI) spending is coming to conclusion and, subject to further work, the Government is considering introducing a presumption against external EDI spending and increasing ministerial scrutiny of EDI spending whilst streamlining EDI training and HR processes with a view to getting value for the taxpayer. The Minister for the Cabinet Office will be outlining the final proposals, in due course.
As well as mainstreaming AI, the government is also exploring the use of other cutting-edge technologies, including quantum, in the public sector. The National Quantum Computing Centre is supporting government and industry to explore how quantum computing could be applied and HMG has launched a Catalyst fund bringing together quantum innovators and government departments to identify and develop near- and longer-term applications.
In June the Chancellor commissioned the National Statistician to run a review to improve the measurement of public sector productivity. As part of the conclusion of the first phase of the ONS’s Public Services Productivity Measurement Review, the ONS has published new experimental baseline estimates for public service productivity from 1997 including nowcasts for 2021 and 2022. [footnote 53] The Review will now proceed to further develop and evaluate new methods and data sources to improve estimates, coverage, and accuracy of public sector productivity measurement. This will deliver early results in Spring 2024 with further improvements on a regular basis after this.
Tackling the Tax Gap
The government is committed to a tax system that is easy for businesses and individuals to engage with, and where everyone pays their fair share. The Tackling the Tax Gap package of measures is the largest since 2016, raising £5 billion of tax revenue over the next five years, which will contribute to funding our public services. [footnote 54]
The government is investing in HMRC’s ability to support individuals and businesses who are unable to pay their tax debts by increasing HMRC’s debt management resource. This will allow HMRC to better target their debt collection activity, pursuing those with tax debts that can afford to pay, and providing support to those that are temporarily unable to pay. The government is also taking action against those who continue to bend or break the rules, by reducing opportunities for tax fraud in the construction industry and taking strong action against promoters of tax avoidance.
Cutting Taxes and Rewarding Work
The government is committed to ensuring work always pays and reforming the welfare system to help people work, where they are able to. In support of this aim, the government is announcing tax cuts for 29 million people.
The government is also expanding the support on offer to help those with a long-term sickness or disability and those who are long-term unemployed to get into work, as well as reforming the Work Capability Assessment (WCA) so that more people are able to access the support on offer. Increasing the number of people in work in this way will grow the economy without putting upwards pressure on inflation.
The Office of Budget Responsibility (OBR) have judged that the Autumn Statement package will not only bring 78,000 people into the labour market, but will also significantly increase the numbers of hours worked in the economy. This means that the combined impacts of the Spring and Autumn policy measures will increase the number of people in employment by around 200,000 by the end of the forecast.
The best way to improve living standards in the long-term is to get more people into higher paid jobs. However, the government recognises that short-term cost of living pressures remain, particularly impacting vulnerable groups. This year the government is providing support through Cost of Living Payments to households on means-tested-benefits, those on disability benefits, and pensioners, and next year will raise the Local Housing Allowance to support low-income families with housing costs. The government will also protect the State Pension Triple Lock and uprate working age benefits in line with inflation.
The government has had to take difficult decisions to restore the public finances in the wake of the economic shocks caused by COVID and Putin’s illegal invasion of Ukraine. But with inflation falling, the economy growing in every year of the forecast and debt set to fall, that hard work is starting to pay off. This means the government is now in a position where it can start to return some money to taxpayers.
Allowing working families to keep as much of their hard-earned money as possible in a sustainable way is a priority for this government, and rewarding work is part of the long-term plan to grow the economy. This is why the government is building on the largest ever increase to National Insurance starting thresholds in 2022, by cutting taxes for 29 million working people and reforming the tax system, which the OBR believe will increase the number of people in employment by 28,000 by 2028-29. [footnote 55] As a result of these cuts and above-inflation increases to personal tax thresholds since 2010, an average worker on £35,400 will pay over £1,000 less in personal taxes in 2024-25 than they otherwise would have done. [footnote 56] Taxes are being cut for employees and the self-employed through a number of changes.
Firstly, the current combined rate of income tax and National Insurance contributions (NICs) for employees paying the basic rate of tax is too high at 32%. The government will address this by cutting the main rate of Class 1 employee NICs from 12% to 10%. This will provide a tax cut for 27 million working people with the average worker on £35,400 receiving a tax cut in 2024-25 of over £450. [footnote 57] By cutting taxes on work, the government is rewarding employees and providing a combined rate of income tax and NICs for an employee paying the basic rate of tax of 30% – the lowest since the 1980s. [footnote 58] This change will make sure work pays, and in 2024-25:
- an average full-time nurse on £38,900 will receive an annual gain of over £520; [footnote 59]
- an average teacher on £44,300 will receive an annual gain of over £630; [footnote 60]
- an average police officer on £44,300 will receive an annual gain of over £630; [footnote 61]
- a typical junior doctor on £63,000 will receive over £750; [footnote 62] and
- working families with two earners on the average income will receive a gain of £900.
This will take effect from 6 January 2024 so that employees benefit as soon as possible. While rate changes usually take effect from 6 April, the government wants to provide people with money in their pockets now and is therefore delivering this as quickly as possible. This will ensure that employees benefit from this tax cut from January onwards as employers make this change to their payroll systems.
Secondly, the government values the work of the self-employed who contribute so much to the economy. Therefore, the government will support the self-employed by cutting the main rate of Class 4 self-employed NICs from 9% to 8% from 6 April 2024. This will benefit around 2 million individuals, recognising the contribution of the self-employed and ensuring that work pays for all.
Finally, the current NICs system is needlessly complicated for the self-employed who have to pay two separate NICs charges in order to access contributory benefits. Therefore, the government will reform the tax system by abolishing Class 2 self-employed NICs. From 6 April 2024, no one will be required to pay Class 2 self-employed NICs. Self-employed individuals with profits above £12,570 are currently required to pay a weekly flat rate of Class 2 NICs, which would have risen to £3.70 from 6 April 2024. The details of this change are:
- From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits, including the State Pension.
Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs as they do currently.
Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.
- The main rate of Class 2 NICs is usually uprated by Consumer Price Index (CPI) and therefore had been due to rise to £3.70 per week in April 2024. For those paying voluntarily, the government has decided to maintain the current rate of £3.45 per week for 2024-25.
The government will set out next steps on Class 2 reform next year. As part of this reform the government will protect the interests of lower paid self-employed people who currently pay Class 2 NICs voluntarily to build entitlement to certain contributory benefits including the State Pension. This is a progressive reform, giving lower-paid self-employed individuals a significant tax cut. It simplifies the system for self-employed taxpayers, reducing needless complexity, freeing up valuable time for them to grow their businesses rather than interacting with the tax system. This builds on the Spring Statement 2022 decision to ensure that self-employed individuals with profits between the Small Profits Threshold and Lower Profits Threshold could continue to build up National Insurance credits without paying Class 2 NICs.
This will mean that a self-employed person who pays Class 2 NICs every week will save at least £192 per year. Together with the cut to Class 4 NICs around 2 million self-employed people will benefit, with an average self-employed person on £28,200 saving £350 in 2024-25. [footnote 63]
These changes build on the historic increases to NICs starting thresholds in 2022 which mean that a UK employee can earn more before paying tax or social security contributions than an employee in any other G7 country. [footnote 64] The action taken today provides a tax cut worth over £9 billion per year – the largest ever cut to employee and self-employed National Insurance. [footnote 65] These NICs cuts and above inflation increases to thresholds since 2010 mean that an average worker on £35,400 will pay over £1,000 less in personal taxes in 2024-25 than they otherwise would have done.
Ensuring work pays
To make sure that work always pays, the government will deliver on its commitment for the National Living Wage (NLW) to meet two-thirds of median earnings. From 1 April 2024, the NLW will increase by 9.8% to £11.44 an hour with the age threshold lowered from 23 to 21 years old, ending hourly low pay. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit 2.7 million low paid workers. [footnote 66] [footnote 67]
From April, take-home pay for someone on the NLW (not in receipt of tax credits or Universal Credit) will have increased in real terms by more than 30% since 2010 (Chart 3.1).
Chart 3.1: Net annual earnings for a full-time worker on the National Living Wage in cash terms (bars) and real terms (line)
Source: Office for National Statistics (Consumer price inflation time series – MM23), Office for Budget Responsibility, historical NMW/NLW rates, historical tax/NI bands and rates. HM Treasury calculations.
Reforming welfare to support people into work
Increasing labour market participation, and rewarding work, remains a key priority for the government. It is important for growing the UK economy sustainably, controlling spending and improving living standards. Getting more people into good jobs is beneficial to those individuals and the best route out of poverty.
Since 2010, the government has been successful in reducing unemployment. Over the period Q1 2010 to Q3 2023 (inclusive), the UK unemployment rate fell by 3.8 percentage points, the third largest percentage point decline among the G7 countries, more than Canada, Japan, France and more than triple the fall in Italy, with only the US and Germany having had a greater reduction. [footnote 68]
However, whilst the UK has made significant progress in reducing unemployment, inactivity – people of working-age neither in work nor looking for or available for work – remains an issue. The UK’s inactivity rate is currently higher than the best performing G7 comparators. While the UK’s inactivity rate is lower than the US, France and Italy, the UK is the only G7 country to have seen an increase in the inactivity rate since Q4 2019. [footnote 69]
Whilst there are many reasons for labour market inactivity, including study and caring responsibilities, the recent rise in inactivity since the onset of the pandemic due to ill-health and disability is particularly concerning. [footnote 70] In its 2023 Fiscal Risks and Sustainability (FRS) report, the OBR highlighted the significant impact rising health-related inactivity is having on the UK’s medium-term economic growth prospects and the public finances, reducing tax receipts by an estimated £8.9 billion and increasing welfare spending by an estimated £6.8 billion in 2023‑24. [footnote 71]
Box 3.A Labour market tightness has eased since the spring, but inactivity remains a key economic challenge
Office for National Statistics (ONS) experimental estimates indicate that the working-age inactivity rate has fallen from 21.4% in Q4 2022 to 20.9% in Q3 2023. This is likely to reflect an unwinding of temporary factors, such as the increase in student inactivity observed over the pandemic. Alongside this, ONS experimental estimates also suggest the unemployment rate has risen, increasing to 4.2% in Q3 2023, up from 3.8% in Q4 2022. [footnote 72]
Despite falls in the headline rate of inactivity, ONS experimental estimates suggest there are still over 350,000 more people of working-age inactive than before the pandemic. The number of people who are inactive due to long-term sickness or disability has also continued to rise since the spring, reaching a record 2.6 million in the latest published data for the three months to July 2023. [footnote 73] This is consistent with Department for Work and Pensions (DWP) benefit caseload data which indicates the numbers of people claiming incapacity benefits (who have Limited Capability for Work and Work Related Activity (LCWRA)) has increased by 0.7 million, to around 2.4 million, since May 2019. [footnote 74]
The government is now building on the policies announced at Spring Budget 2023, which the OBR had forecast would have an overall impact on GDP of around 0.2% in 2027-28. [footnote 75] That package focused support towards those groups where employment support was most needed. The policies included:
- For parents, removing one of the biggest barriers to parents working, by substantially increasing the amount of free childcare that working families can access. All eligible working parents in England will be able to access 30 hours of free childcare per week for 38 weeks per year from when their child is 9 months old, to when they start school
- To extend working lives, enhancing the digital strand of the midlife MOT offer, and removing the Lifetime Allowance charge, raising the Annual Allowance, and increasing the Money Purchase Annual Allowance to stop these limits acting as a barrier to remaining to work
- For those with a health condition or disability, embedding employment support within mental health and musculoskeletal health (MSK) services in England, digitising the NHS Health Check, publishing the Health and Disability White Paper and introducing a new Universal Support programme to support people with disabilities and long-term sickness into work
- For welfare recipients, increasing work coach support and work search requirements, including increasing the Administrative Earnings Threshold (AET), strengthening the way the sanctions regime is applied, extending the Youth Offer and expanding the Additional Job Centre Support Pilot.
The Back to Work Plan
At Autumn Statement, the government builds on this through its Back to Work Plan, which includes investment of over £2.5 billion over the next five years, and which will significantly expand available support and transform the way people interact with the benefits system. It has been designed to support those who are long-term unemployed to find work, and to ensure that those with long-term sickness or disabilities are better equipped to manage their conditions and participate in work, if they are able to do so.
Supporting the long-term unemployed into work
The latest data for the three months to July shows there were around 300,000 people who had been unemployed for over a year: a fifth of the UK’s overall unemployed population. [footnote 76] The proportion of unemployed people out of work for over a year is significantly higher in the UK than the top performing countries in the OECD. [footnote 77]
The longer someone spends out of work, the harder it becomes for them to find a job. [footnote 78] Minimising the time people spend unemployed is therefore vital to increasing labour supply while helping individuals realise the social, health and financial benefits that meaningful work brings.
As part of the Back to Work Plan the government will invest over £1.3 billion over the next five years to help tackle long-term unemployment by establishing an end-to-end process that supports and incentivises unemployed Universal Credit claimants to find work. These policies, which include expanding Additional Jobcentre Support and strengthening Restart, build on the comprehensive welfare package announced at Spring Budget 2023, which increased work coach support for claimants.
To incentivise compliance, the government will strengthen the Universal Credit sanctions regime. This will further enforce the government’s expectation that those who can work must engage with the support available or lose their benefits:
- the government will target claimants who continue to disengage with Jobcentre support by closing the claims of individuals who have been on an open-ended sanction for over six months and who are solely eligible for the Universal Credit standard allowance. This will also end their access to additional benefits such as free prescriptions and legal aid
- to root out fraud and error, the government will use the existing Targeted Case Review process to review the Universal Credit claims of disengaged claimants who have been on open-ended sanctions for over 8 weeks, ensuring they receive the right entitlement
- the government will track claimants’ attendance at job fairs and interviews organised by Jobcentres so that work coaches have the information they need to determine whether claimants are meeting their commitments. The government will look to build on these changes in the future to further integrate employers into Jobcentre processes and improve oversight of claimants’ work search activities.
The Back to Work Plan provides enhanced support, delivered across three phases of a claimant’s work search journey, with interventions intensifying the longer a claimant remains unemployed:
- phase 1 : unemployed claimants across Great Britain will receive regular support from a work coach to search for and move into work. To strengthen the government’s understanding of how early interventions can best help claimants find work or increase their income, the government has expanded Additional Jobcentre Support , currently live in 90 Jobcentres. [footnote 79] , [footnote 80] This will test the impact of intensive support 7 weeks into a claimant’s work search journey, building on the pilot announced at Spring Budget 2023 to test the impact of interventions at 13 and 26 weeks
- phase 2 : if a claimant in England and Wales has failed to find a job after 6 months, they will be referred to an expanded and improved Restart . The scheme will provide 12 months of intensive, tailored support to tackle barriers to employment, with more expectations placed on claimants and eligibility expanded to include those who are 6 months, rather than 9 months as now, into their work search journey. Support will include coaching, CV and interview skills, and training sessions. Work coaches will track the activity of participants to ensure they comply with the scheme’s requirements
- phase 3: claimants in England and Wales who are still unemployed after 12 months on Restart will take part in a claimant review point : a new process whereby a work coach will decide what further work search conditions or employment pathways would best support them into work. If no suitable local job is available immediately, claimants will be required to accept a time-limited mandatory work placement or take part in other intensive activity, designed to increase their skills and improve their employability. If a claimant refuses to accept these new conditions without good reason, their Universal Credit claim will be closed. This model will be rolled out gradually from 2024.
As a result of these reforms, no claimant should reach their claimant review point at 18 months of unemployment in receipt of their full benefits if they have not taken every reasonable step to comply with Jobcentre support.
The government will also take further action on fraud and error by legislating to increase the DWP’s access to data on benefit claimants that is held by third parties (e.g. banks). This will enable DWP to better identify fraud in the welfare system, especially in detecting fraudulent claims where there is undeclared capital, which is the second highest type of welfare fraud. These extra powers are estimated to generate around £300 million per year savings by 2028-29. [footnote 81]
Supporting the long-term sick and disabled into work
The government announced a wide-reaching package at Spring Budget 2023 including reforms to help those with disabilities and health conditions. The Back to Work Plan builds on this and includes investment of almost £1.3 billion over the next five years to deliver a significant expansion of work and health support as well as reforms to the way people who fall ill interact with the state.
By giving people greater access to mental health treatment and employment support the government aims to improve their health outcomes, providing both a better quality of life and increasing their chances of staying in or returning to work sooner.
Expansion of employment support and available treatments
Between 2019 and 2023, the number of people inactive because of long-term sickness who reported a mental health condition rose by over 35%. [footnote 82] To counter this trend, the government is committing £795 million over the next five years to tackle the root causes of mental health problems and support people to remain in or return to work, providing support for an additional half a million people over five years.
The government will expand Individual Placement and Support for Severe Mental Illness , the employment support service within community mental health teams, aiming to help people gain and retain paid employment, offering an additional 100,000 places over five years. The government will also expand Talking Therapies , the flagship NHS England programme for treatment of mild and moderate mental health conditions. Funding will be provided to increase the number of sessions per course of treatment as well as broaden access, leading to an expected additional 384,000 people completing a course of treatment by 2028‑29. [footnote 83]
The government will also increase the annual number of placements available on Universal Support to 100,000 in England and Wales, doubling its commitment at Spring Budget 2023. The programme matches long-term sick and disabled participants with suitable vacancies, based on their preferences, strengths and any lessons learnt from previous work experience. It also funds support of up to £4,000 per participant, such as for relevant training or employer adjustments, to ensure that they can succeed in their roles.
Reform to the way people who fall ill interact with the state
Following a consultation, the government is reforming the activities and descriptors in the WCA to better reflect the greater flexibility and reasonable adjustments now available in the world of work. [footnote 84] This reform will prevent some individuals from being deemed as not fit for work, and ensure they are better supported into employment. These changes will apply to new claims only when the reform is implemented from 2025 onwards.
In the absence of Autumn Statement policies, the OBR forecast that the combined number of people in the Universal Credit LCWRA group and the Employment and Support Allowance Support Group (ESA SG) was due to increase from around 2.4 million individuals in 2023‑24 to around 2.9 million individuals in 2028‑29. [footnote 85] The government’s WCA reforms have significantly reduced this, more than halving the net flows into LCWRA and ESA SG over five years and ensuring that more individuals receive the right work and health support at the right time. [footnote 86]
The government will also explore end-to-end reforms of the fit note process to support more people to resume work after a period of illness. As part of this, trailblazer trials in a small number of Integrated Care Systems in England will test changes to increase access to health and employment support for those who have received a fit note for a prolonged period of time. The government will launch a consultation in 2024 on wider reforms, to examine options for improving fit note assessments and integrating quicker access to specialised employment and health support.
Working with employers to support their employees
Employers can play a key role in preventing sickness leading to long-term economic inactivity. Over 9 million people in work have a long-term health condition and the government wants to collaborate with employers to help them play their part in preventing their employees from becoming inactive due to ill-health. [footnote 87]
Provision of high-quality Occupational Health (OH) is important for helping employees with disabilities and long-term health conditions to stay in work. Following the recent consultation, the government will meet employers’ requests for clearer guidance and support by establishing an expert group to develop a new voluntary OH framework in Great Britain. [footnote 88] The full consultation response outlines further detail. The government will also work with employers and business representatives to develop and promote best employment practices for employees with health and disability issues.
Supporting vulnerable households
Over the last two years, the government has demonstrated its commitment to supporting the most vulnerable. In response to the energy crisis, the government provided one of the largest support packages in Europe. [footnote 89]
The government has provided significant energy support this year and last through the Energy Price Guarantee (EPG) and Energy Bills Support Scheme (EBSS) which together paid for almost half of the typical family’s energy bill from October 2022 to June 2023. [footnote 90] This is in addition to the benefits uprating and support for vulnerable households announced last year, which included new Cost of Living Payments in 2023-24 and a £1 billion extension of the Household Support Fund.
In June, the government also announced the Mortgage Charter to support residential mortgage customers. This Charter sets out the standards that Signatory Lenders – who represent over 90% of the UK mortgage market – will adopt when helping their customers. [footnote 91] This offers mortgage holders greater flexibility in managing their finances and offers protections against repossession.
It is partly as a result of these measures that growth has been stronger than expected this year, as resilient real incomes, in aggregate, supported consumption. Inflation has more than halved from its 2022 peak, though remains too high. [footnote 92] The government continues to support the Monetary Policy Committee (MPC) in its action to bring inflation down to the 2% target by keeping borrowing under control.
High inflation reduces living standards. The OBR expects living standards, as measured by real household disposable income (RHDI) per person to fall by 0.8% in 2023-24, before recovering as labour incomes grow faster than inflation. This outlook has improved since Spring Budget 2023. In the year to Q2 2023, RHDI per person was around £800 higher than the OBR expected in their March forecast. The OBR’s Autumn Statement forecast shows a fall in RHDI that is half as large as at Spring Budget 2023. [footnote 93] This pressure on real incomes is not spread equally, with some households more exposed than others, particularly to higher interest rates, rental costs and food and energy prices. [footnote 94]
Over 2023-24, the government is providing targeted support to the most vulnerable, through Cost of Living Payments, to 8 million UK households on eligible means-tested-benefits, 8 million pensioner households and 6 million people across the UK on eligible disability benefits. [footnote 95] Local Authorities will also be able to continue supporting households with the cost of essentials through the £1 billion provided for the Household Support Fund this year.
Going further, to support households that need most help to pay their rent, the government will also raise Local Housing Allowance rates in Great Britain to the 30th percentile of local market rents in April 2024. 1.6 million low-income households will be better off, gaining £800 on average in 2024-25. [footnote 96]
To support low-income households to build savings, the government is also reforming the Help to Save scheme, which aims to encourage low-income workers to save for short-term and long-term term goals and kickstart a lifelong savings habit, through adding a bonus to savings. The new design will ensure the scheme’s sustainability as a key savings product, encourage take-up and provide the best value for taxpayers. The new design will be published in due course, alongside the launch of a consultation on the most effective way to deliver it.
The government will also increase working age benefits delivered by DWP in Great Britain and by HM Revenue and Customs across the United Kingdom by 6.7% next year, equivalent to inflation in the 12 months to September 2023, which is the typical basis for benefit uprating and is higher than the OBR’s forecasts for earnings and inflation next year. [footnote 97] This will see 5.5 million households on Universal Credit gaining £470 on average in 2024-25, in addition to the government’s other cost of living support. [footnote 98]
The government is supporting pensioner incomes by maintaining the Triple Lock. The basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with average earnings growth of 8.5% in the reference period. [footnote 99] This means that the new State Pension will be worth up to £900 a year more. [footnote 100]
Taken together, support to households to help with cost of living pressures is worth £104 billion over 2022-23 to 2024-25, or £3,700 per household on average. [footnote 101]
Backing British Business
Growing the economy without fuelling inflation.
The government is focussed on long-term decisions to strengthen the economy. The government recognises that growth cannot be generated through directing economic activity – it comes from giving individuals the freedom to learn, innovate and succeed. The job of government is to create the right conditions for the private sector to thrive. In light of challenging fiscal conditions, the government must be smarter and more strategic – this means prioritising the UK’s strengths and being focussed on the biggest opportunities for growth.
The government supported households and businesses through historic shocks. This year, GDP growth has been more resilient than forecast in the spring and was faster than Germany, Italy and the euro area as a whole. [footnote 102] Revisions to the National Accounts mean that the level of GDP is higher than previously thought. [footnote 103] GDP growth has slowed into the second half of 2023 as higher interest rates contributed to a fall in household consumption. [footnote 104] Responsible policy choices at Autumn Statement support lower taxes and long-term, sustainable growth, whilst supporting the Bank of England in reducing inflation. The Office for Budget Responsibility (OBR) forecast shows that, compared to Spring Budget 2023, borrowing is lower on average across the forecast and debt as a proportion of GDP is lower in every year. [footnote 105]
At Spring Budget 2023, and in successive announcements since, the Chancellor has set out the government’s plan to deliver sustained economic growth. The Autumn Statement goes further, tackling long-term barriers to investment, cutting taxes and rewarding work. The policies set out in Box 4.A, taken together, could raise business investment by around £20 billion per year in a decade’s time.
- To unlock business investment the government will make full expensing permanent , building on the UK’s already competitive business tax regime and making sure the UK has one of the most generous capital allowances regimes in the world.
- To get Great Britain building and to deliver energy security and the net zero transition, the government will remove barriers to investment in critical infrastructure by reforming the UK’s inefficient planning system and speeding up electricity grid connection times .
- To ensure that the UK’s world-leading financial system invests the capital companies need to grow, the government is bringing forward a comprehensive package of pension reform and driving private investment from insurers into infrastructure by legislating for key reforms to Solvency II .
- To ensure the door is held wide open to those that want to invest in the UK’s future, the government is taking steps to boost foreign direct investment, through supporting the Office for Investment to strengthen its concierge offer to strategically important investors.
- To help create the conditions for innovative and dynamic businesses to thrive, the government is bringing forward an ambitious package to supercharge small and medium sized enterprises as the engine room of the economy.
- To unlock investment, support levelling up and enable the UK to seize growth opportunities through the transition to net zero, the government is making £4.5 billion available in strategic manufacturing sectors – auto, aerospace, life sciences and clean energy – from 2025 for five years.
- To support a thriving economy, the government will deliver a world-class education system to ensure employers have access to a strong, dynamic and highly skilled workforce that meets industry needs.
- Lastly to ensure the benefits of its growth package are felt everywhere, the government is announcing new Investment Zones and plans for deepening and extending devolution to boost investment and deliver on the government’s commitment to levelling up.
Unlocking business investment
Relatively low business investment compared to other advanced economies has been part of the UK’s historically weak productivity performance. UK business investment has been 9.5% of nominal GDP over the last 10 years, compared to 11.2% on average in France, Germany and the US. [footnote 106] This has fed into the UK’s productivity weakness with lower capital stock per hour worked accounting for most of the productivity gap to France and around half that to Germany. [footnote 107]
There is no single driver of the UK’s business investment gap. The government’s strategy is centred on removing barriers, providing the right incentives and expanding access to capital in order to increase levels of investment. Government action is already having an impact – although the data can be volatile and revised – since Q2 2021, when the super deduction was launched, investment growth has been faster in the UK than any other country in the G7. [footnote 108]
Chart 4.1: Decomposition of the UK’s output per hour worked gap with selected economies, 2019
Source: HM Treasury estimates using GDP and GDP per hour worked at current prices and adjusted for purchasing power parity from OECD’s data warehouse. Calculations also use Penn World Tables (version 10.01) data on capital services at current purchasing power parities, index of human capital per person, and the share of labour compensation in GDP.
Box 4.A Business investment package effects
The Autumn Statement announces a range of measures to grow the supply-side of the economy by supporting increased business investment. As the Office for Budget Responsibility set out in the Economic and fiscal outlook, full expensing is expected to raise business investment and potential output within the five-year economic forecast, and other measures could boost business investment over the longer term. [footnote 109] This box sets out some of these longer‑term effects.
Policies and their economic effects
Permanent full expensing reduces firms’ cost of capital for qualifying plant and machinery investment. This raises the economy’s long run optimal capital stock, which in turn increases annual business investment. The OBR expect the policy to increase business investment by £3 billion per year.
Pension reforms, as described below, have the potential to make more pension scheme funding available to finance business investment. This could result in an additional £75 billion of financing for unlisted equity investment. Some of this would flow overseas or to secondary investments. But this additional finance could also address the current mismatch between the supply and demand for equity finance by smaller firms in the UK (an “equity gap”), thereby raising business investment. [footnote 110] The insurance industry may similarly increase investment in productive assets due to reform to Solvency II. [footnote 111] Taken together, these reforms could support an increase in business investment of around £2 billion per year in the long run.
The government is also targeting public funding within the manufacturing sector to help unlock private investment in eight strategic sectors. The targeted funding will support opportunities to develop and build the UK’s current or future economic strengths and enable UK industries to remain at the forefront of the global transition to net zero. This funding could support an average of £2 billion of additional business investment per year in UK manufacturing for 10 years. [footnote 112]
Several of the measures, for example reforms to upgrade the electricity transmission network, are intended to remove barriers to investment, as discussed below, and could therefore result in investment being brought forward. Analysis published by Department for Energy Security and Net Zero (DESNZ) and reviewed by the Energy Systems Catapult estimates that, once embedded, the grid reforms announced could increase investment temporarily by an average of £10 billion per year over the next ten years, speeding up the transition to net zero. [footnote 113] Alongside reforms to planning and the electricity grid, as part of the ongoing Price Review process led by Ofwat and based on submitted draft plans, water companies could increase investment by £6 billion per year compared to the previous price review period. [footnote 114]
Taken together, the policy measures set out above will build over time so that they could raise business investment by around £20 billion per year in a decade’s time.
There are uncertainties around the estimated aggregate impact. Any sustained, additional business investment on this scale would need to be met via an increase in domestic or foreign savings. Other government policy measures have the potential to help facilitate this – notably, the packages announced at Spring Budget and in the Autumn Statement that together add nearly 200,000 people to employment. [footnote 115] A positive labour supply boost such as this can raise aggregate income and national savings, facilitating higher business investment. [footnote 116] The existence of this channel can therefore increase confidence in the estimates presented here.
Setting out the UK’s world class business tax and investment offer
The UK already has one of the most competitive business tax regimes among major economies, with the lowest headline rate of Corporation Tax and joint highest uncapped headline rate of R&D tax relief for large companies in the G7. [footnote 117] [footnote 118]
Chart 4.2: Headline Corporation Tax rate, G7 countries, 2023
Source: OECD Tax Database, rate takes into account surcharges and sub-national rates
At Spring Budget 2023 the government went further by introducing full expensing for three years from 1 April 2023 – a £27 billion Corporation Tax cut for companies investing in the UK – and undertook to make this tax cut permanent when fiscal conditions allowed.
The government is honouring this now, by making full expensing permanent. This reflects the government’s commitment to support businesses to invest, as well as to ensure the tax system is simple, stable and predictable.
Companies across the UK will be able to write off (“fully expense”) the full cost of qualifying main rate plant and machinery investment in the year of investment, supporting businesses to invest and grow. This means companies are rewarded with up to 25p off their tax bill for every £1 that they invest, which amounts to a tax cut of over £10 billion per year. [footnote 119]
This significant reform makes the UK’s capital allowances regime one of the most generous in the world, and it boosts the UK to joint first among OECD countries in net present value terms. The UK’s low and internationally competitive Corporation Tax rate, combined with some of the world’s most generous investment incentives, will ensure the tax system encourages investment.
Chart 4.3: Net present value of plant and machinery capital allowances, 2022 OECD regimes
*The US, Canada and Chile are in the process of phasing out their temporary full expensing policies for plant and machinery capital allowances since the data in this chart was published, which mean that NPVs are now expected to be lower.
Source: HMRC analysis using OECD 2022 data from Tax Foundation 2023 cost of capital recovery publication.
Full expensing has long-term and wide-reaching economic benefits, reducing the cost of capital for firms and boosting overall business investment by £3 billion a year according to the OBR. [footnote 120] The additional investment increases GDP by 0.1% by the end of the forecast period, increasing further to slightly below 0.2% in the long run. [footnote 121] The government has prioritised this business tax cut as it is the most effective tax measure to prioritise growth across all sectors of the economy, rewarding those that invest the most with lower taxes.
Permanent full expensing, including the 50% first-year allowance for special rate assets, will give companies certainty to plan long-term investments. This applies across the economy, including to the UK’s capital intensive green industries such as solar and offshore wind, which will also benefit from a new investment exemption from the Electricity Generator Levy. Permanent full expensing also provides further support for companies that want to decarbonise by investing in solar panels and heat pumps, and for companies that want to invest in newer, greener plant and machinery.
The cash flow benefits of full expensing are particularly important in a high interest rate environment when companies are facing higher costs, since cash up front has become even more valuable than a stream of future lower payments through Writing Down Allowances. Given that costs of the policy are much lower in the long-term, the government sees full expensing as an effective and targeted way of using the government’s balance sheet to increase investment in a fiscally sustainable way.
The move to full expensing also provides us with an opportunity to permanently simplify capital allowances. The government will therefore launch a technical consultation on wider changes to simplify the UK’s capital allowances legislation.
Since Spring Budget, the government has been exploring the case for expanding the scope of full expensing to include assets for leasing with an industry working group. The government will continue to carefully consider whether there is a case to do so and publish a technical consultation in due course to seek further input from a wider range of stakeholders.
The government is committed to protecting and enhancing the UK’s energy security and maintaining competitiveness. In recognition of this, alongside confirming the Energy Profits Levy will end no later than 31 March 2028, the government has published the conclusion to the review of the oil and gas fiscal regime and set out the final design of the Energy Security Investment Mechanism, including future adjustments to the mechanism’s price thresholds in response to inflation. This package will provide certainty and predictability for investors and operators in this crucial industry in the short-, medium- and long-term.
The government is committed to supporting businesses with business rates bills. Many larger retail businesses and large supermarkets benefitted from the 2023 business rates revaluation and the £13.6 billion package of support provided at Autumn Budget 2022, which together decreased total bills paid by the retail sector by an estimated 20% and large supermarkets by an estimated 15%. [footnote 122] A third of properties in England have already been taken out of rates completely through Small Business Rates Relief, and the government has also frozen the tax rate for the last three years, extended the relief for Retail, Hospitality and Leisure (RHL) properties and removed downwards caps from Transitional Relief. [footnote 123]
The government will continue to make sure that support is offered to the small businesses, high street shops and independent cafes and pubs that need it most. The small business multiplier will be frozen for another year, while the 75% RHL relief will be extended for 2024-25. The standard multiplier will be uprated in line with September’s CPI. These changes will take effect from 1 April 2024 in England. English Local Authorities will be fully compensated for the loss of income as a result of these business rates measures and will receive new burdens funding for administrative and IT costs.
The government has chosen to prioritise measures that will boost investment and growth, while not fuelling inflation. While this means that business rates bills will go up for some, these increases will be far outweighed by the benefits of full expensing for companies that invest. For example, HM Treasury estimates that while inflation uprating of the multiplier will result in an increase of £250 million or 6.4% in business rates paid by the retail sector in 2024-25, the sector could benefit from full expensing by around £1 billion per year. [footnote 124] In addition, total bills paid by larger retail businesses and supermarkets will still be lower in 2024-25 than they were before the 2023 revaluation.
The Government is committed to internationally competitive R&D tax reliefs. Following consultation, the current R&D Expenditure Credit (RDEC) and SME schemes will be merged from April 2024 onwards, simplifying the system and providing greater support for UK companies to drive innovation. The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%. The intensity threshold in the R&D intensives scheme will also be reduced from 40% to 30% for accounting periods that start on or after 1 April 2024, allowing around 5,000 extra SMEs to qualify for an enhanced rate of relief. [footnote 125] A one year grace period will also be introduced, providing certainty for companies who dip under the 30% threshold that they will continue to receive relief for one year. Taken together, these changes will provide £280 million of additional relief per year by 2028-29 to help drive innovation in the UK.
Removing barriers to investment and supporting infrastructure
Delivering high quality infrastructure is crucial for boosting economic growth and productivity across the UK, and is an essential foundation for increasing energy security and transitioning to net zero. This means addressing barriers to investment such as the UK’s outdated planning system and lengthy delays to connect to the electricity grid; and making the economic regulatory framework more pro-investment.
Reforming the UK’s planning system is crucial to ensuring there is investment in the essential infrastructure and commercial development needed for growth. The government will progress the National Infrastructure Commission’s (NIC) April recommendations on planning by delivering reforms to return the Nationally Significant Infrastructure Project regime to the two and a half year average consenting time achieved in 2012. [footnote 126] [footnote 127] As set out in ‘Getting Great Britain building again: speeding up infrastructure delivery’ policy paper, the government’s active reform agenda to deliver this ambition includes publishing spatial data on major infrastructure projects for the first time and ensuring a more reliable process for updating National Policy Statements, further to the updates to the National Networks and Energy National Policy Statements that will be designated in the coming months. [footnote 128]
Alongside reforms to deliver infrastructure quicker, the government will strengthen the capacity of the planning system to deliver a better service for businesses, including introducing new premium planning services across England with guaranteed accelerated decision dates for major applications and fee refunds wherever these are not met. These services will improve the existing patchwork approach of Planning Performance Agreements. The government will also invest £5 million to incentivise greater use of Local Development Orders in England, to end delays for businesses so that key commercial projects secure planning permission faster.
The government is also creating more certainty for investors in low-carbon infrastructure by extending the critical national priority designation for nationally significant low-carbon energy projects. Alongside this, the government will look to remove unnecessary planning constraints by accelerating the expansion of electric vehicle (EV) charging infrastructure and will consult on amending the National Planning Policy Framework to ensure the planning system prioritises the rollout of EV chargepoints, including EV charging hubs. It will also consult on introducing new permitted development rights to end the blanket restriction on heat pumps one metre from a property boundary in England. Together these measures will reduce delays and capitalise on the UK’s world-leading approach to decarbonising the economy.
Substantive action is required to address the lengthy wait to connect to the electricity grid. These delays limit investment in the transition to low-carbon power generation, which is critical to the UK’s energy security. The government is therefore announcing reform of the grid connection process to cut waiting times, including freeing up over 100GW of capacity so that projects can connect sooner. This will help to enable the significant majority of projects to get their requested connection date with no wait and, for viable projects, reduce overall connection delays from five years to no more than six months. [footnote 129]
The government is also setting out an Action Plan to halve the time to build new grid infrastructure to seven years, in response to the review by the Electricity Network Commissioner, Nick Winser. Key elements of this action plan include new proposals for community benefits with up to £10,000 off electricity bills; consulting next year on reforms to energy consenting rules in Scotland; committing to commission the Electricity System Operator to work with government to produce a new Strategic Spatial Energy Plan; and introducing competition into onshore electricity networks in 2024 to benefit consumers. These actions will support the government’s efforts to electrify and decarbonise the economy and increase the UK’s energy security. Overall, these actions will help to lower electricity prices and are estimated to deliver a net saving of £15-25 on average per household per year out to 2035. [footnote 130]
The Autumn Statement addresses several of the NIC’s recommendations, published in October in its second National Infrastructure Assessment (NIA2). [footnote 131] The government will respond in full to the NIA2 with an updated National Infrastructure Strategy next year.
The government continues to make the most of its Brexit freedoms to make the UK’s globally respected regulatory regime even more pro-growth and pro‑investment without compromising on its quality and effectiveness. In addition to consulting on the economic regulation framework to encourage greater private investment through proposals to increase competition for strategic infrastructure investment and develop a long-term investment blueprint, the government is also consulting on stronger guidance on the regulators’ Growth Duty; extending the Growth Duty to Ofgem, Ofwat and Ofcom; and providing a new strategic steer for the Competition and Markets Authority. [footnote 132] [footnote 133] This will ensure the UK’s regulators must be pro-innovation, agile facilitators of growth in the sectors they regulate. The government will kickstart a Smart Data Big Bang, giving industry and investor certainty by setting out the UK’s ambition for using new powers in the Data Protection and Digital Information Bill, exploring innovative opportunities across seven sectors: energy, banking, finance, retail, transport, homebuying and telecoms.
The government welcomes the Financial Reporting Council’s (FRC) renewed focus on ensuring the UK’s corporate governance and stewardship regime supports growth and enhances the UK’s international competitiveness. Reflecting the importance of this work, the government has updated the FRC’s remit. The revised remit emphasises the important role the FRC should play in promoting the competitiveness and growth of the UK economy whilst fulfilling its core purpose of enhancing public trust and confidence in corporate governance. [footnote 134]
Recognising the need to better support the critical links between and within towns and cities, the government recently made the decision to not extend HS2 beyond Birmingham, and to take a radically new, development-led approach at Euston station, which will leverage significant private finance. The government’s decisions on HS2 will deliver £36 billion of savings that will be reallocated to Network North, an ambitious pipeline of alternative transport projects which will drive growth and connectivity in the great towns and cities across the North. [footnote 135] This will expand Northern Powerhouse Rail, allocate an extra £8.3 billion to roads resurfacing across England; deliver the long-promised mass transit system in West Yorkshire; and provide £8.55 billion of additional funding for the second round of City Region Sustainable Transport Settlements (CRSTS2).
Unlocking investment in growth through the financial system, pension funds, and international investment offer
The government has announced a comprehensive package of pension reform that will provide better outcomes for savers, drive a more consolidated pensions market and enable pension funds to invest in a diverse portfolio. These measures represent the next steps of the Chancellor’s Mansion House reforms and meet the three golden rules: to secure the best possible outcomes for pension savers; to prioritise a strong and diversified gilt market; and to strengthen the UK’s competitive position as a leading financial centre. [footnote 136] This package builds on the momentum from industry over the summer which has seen further signatories join the Mansion House Compact taking the total number to 11, the launch of the British Venture Capital Association’s Venture Capital Investment Compact and the Mansion House Pension Summit bringing together pension funds, trustees and private market investors for the first time.
Large schemes can drive down costs for savers and are better placed to diversify into growth equity. [footnote 137] Therefore the government welcomes the current trend of defined contribution pension fund consolidation and expects to see a market in which the vast majority of savers belong to schemes of £30 billion or larger by 2030. [footnote 138] The Financial Conduct Authority (FCA) will consult next spring on the next steps of the new Value for Money Framework. As part of this, schemes will be required to compare themselves against others in the market, including large scale schemes, to ensure they are delivering value for their members.
The government will tackle the long-standing problem of “small pot” pensions and is launching a call for evidence on a lifetime provider model which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension.
To increase opportunities for defined benefit schemes to invest in productive finance while fully protecting member benefits, the government will consult this winter on how the Pension Protection Fund can act as a consolidator for schemes unattractive to commercial providers and whether changes to rules around when surpluses can be repaid, including new mechanisms to protect members, could incentivise investment by well-funded schemes in assets with higher returns. The authorised surplus repayment charge will also be reduced from 35% to 25% from 6 April 2024.
Following consultation, the government confirms that guidance for the Local Government Pension Scheme (LGPS) in England and Wales will be revised to implement a 10% allocation ambition for investments in private equity, which is estimated to unlock around £30 billion. [footnote 139] The government is also establishing a March 2025 deadline for the accelerated consolidation of LGPS assets into pools and setting a direction towards fewer pools exceeding £50 billion of assets under management.
To support pension scheme investment into the UK’s most innovative companies, the government will commit £250 million to two successful bidders in the Long-term Investment for Technology and Science (LIFTS) initiative, subject to final agreement. This will create new investment vehicles tailored to the needs of pension funds, generating over a billion pounds of investment from pension funds and other sources into UK science and technology companies.
Following positive feedback from industry, the government is confirming its intention to establish a Growth Fund within the British Business Bank (BBB). The Growth Fund will draw upon the BBB’s expertise and a permanent capital base of over £7 billion to give pension funds access to investment opportunities in the UK’s most promising businesses. A new Venture Capital Fellowship will help produce the next generation of world-leading investors in the UK’s renowned venture capital funds to support investment into the UK’s most innovative high-growth companies.
Alongside measures on pensions investment, the government is legislating to give effect to the Solvency II reforms to deliver a more tailored, clearer and simpler regulatory regime for the insurance sector. The reforms will boost economic growth by incentivising private investment for productive assets, such as infrastructure. Industry have committed to investing over £100 billion in a greater range of productive assets over the next decade as a result of the Solvency II reforms. [footnote 140]
The government is committed to ensuring that the UK is the most attractive destination in Europe for internationally mobile investment. To that end, the Chancellor and the Secretary of State for Business and Trade asked Lord Harrington in March 2023 to review the government’s approach to attracting foreign direct investment.
Lord Harrington’s Review has been published alongside the Autumn Statement. [footnote 141] The government has responded and accepted in principle his headline recommendations. [footnote 142] A new Ministerial Investment Group will be established, tasked with driving the government’s ambition on investment. This will be backed by additional resource and an improved toolkit for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
Supporting the growth of the UK’s world-leading financial services sector
The UK’s world-leading financial and related professional services sector is a vital source of UK growth. It makes up an estimated 12% of the economy, contributes around £100 billion a year in tax receipts and employs 2.5 million people across the country. [footnote 143] The government is taking important steps to build on these strengths – setting the UK up for another century of success as the global capital for capital – to grow the sector and the economy.
Ensuring UK companies have access to capital and supporting the UK’s world-leading capital markets is critical for future growth. The government’s comprehensive package of ongoing regulatory reforms includes Lord Hill’s Listings Review, Mark Austin’s Secondary Capital Raising Review, Rachel Kent’s Investment Research Review and the Wholesale Markets Review. [footnote 144] The government is now delivering Lord Hill’s central recommendation, laying legislation to fundamentally overhaul the UK’s prospectus regime. In addition, the government is putting in place a consolidated tape to improve market data; launching a financial market infrastructure sandbox to test distributed ledger technology; and making fundamental changes to short selling. Finally, the FCA and government are also engaging industry stakeholders to take forward the recommendations of the Investment Research Review.
Following the passage of the Financial Services and Markets Act 2023 in July, the government continues to take steps to ensure the UK maintains and enhances its world-leading financial services regulatory environment. The government repealed over 100 pieces of unnecessary retained EU law earlier this year. [footnote 145] As part of the Edinburgh Reforms, the government committed to making significant progress in building a Smarter Regulatory Framework tailored to the UK by the end of the year. The government is delivering on this promise by soon laying key legislation, and publishing drafts of other legislation being progressed. Given the global interconnectedness of the financial system, the government also continues to work closely with its international partners through the Financial Stability Board and other fora to establish and maintain high global standards and to mitigate risks to financial stability.
The government is also committed to growing the UK’s world-leading retail payments sector. That is why the government supports Joe Garner’s independent review into the future of payments. [footnote 146] The government is acting to implement the review’s core recommendations, including repealing prescriptive EU-derived payments authentication rules allowing industry to better prevent fraud and improve the customer payments experience. The FCA will review the rules with a view to adopting an outcomes-based approach, and will specifically consider the contactless limits.
The government is also committed to unlocking the full potential of Open Banking-enabled payments and will seek to legislate next year to support this. The government’s intention is for the new regulatory framework to require firms beyond the largest banks to participate in a sustainable and equitable commercial model through which the technology and necessary consumer protections will be developed, and with appropriate regulatory backstops. In line with the Review’s central recommendation, the government will publish a National Payments Vision next year. Building from the review’s findings, this will include consideration of priorities for UK payments and, working with the Payment Systems Regulator and the Bank of England, will consider the role of the New Payments Architecture.
The government is committed to exiting its shareholding in NatWest, subject to market conditions and sales representing value for money. The government intends to fully exit by 2025-26 utilising a range of disposal methods, including accelerated bookbuilds and directed buybacks with NatWest and also via continuing sales through the ongoing trading plan. As part of the plan to return NatWest to the private sector, the government will explore options to launch a share sale to retail investors in the next 12 months, subject to supportive market conditions and achieving value for money.
The government is making changes to simplify ISAs and provide more choice, meaning it will be easier for people to choose the best ISA accounts for their needs and move money between them. This involves digitalising the ISA reporting system to make it more effective, as well as expanding the investment opportunities available in ISAs to include Long-Term Asset Funds and open-ended property funds with extended notice periods.
Fostering a dynamic and innovative investment economy
Supporting the uk’s scientists and innovators.
Scientific breakthroughs are a crucial driver of long-run growth and play a critical role in improving lives and helping to tackle societal challenges. The UK hosts many of the world’s leading universities and the government provides the most generous support for business R&D in the OECD as a share of GDP through tax relief and public investment. [footnote 147] The government is now going even further to ensure the UK remains at the cutting edge of science, innovation and technological development.
The Prime Minister has negotiated excellent terms for the UK to associate to Horizon Europe and Copernicus, getting great value for taxpayers while maximising opportunities for researchers. As a result, the government can now announce ambitious investments of over £750 million in UK R&D this financial year. These investments include transformative new programmes, including £250 million for long-term world-class Discovery Fellowships, £145 million for new business innovation support, and support to establish a National Academy focussed on mathematical sciences. The government is also ensuring the research, development and innovation organisational landscape is diverse, resilient, and investable, in response to Sir Paul Nurse’s review. [footnote 148] The government will also continue to cut bureaucracy in grant applications.
University spin-outs are some of the UK’s most innovative companies and play a hugely important role for the UK economy, with investment increasing almost five-fold since 2014. [footnote 149] To capitalise on this strength, the government is accepting all the recommendations of the Independent Review of Spin-outs and setting out how it will deliver them. [footnote 150] Several universities and investors have already endorsed the recommendations of the review, and the government will provide £20 million for a new cross-disciplinary proof-of-concept research funding scheme, to help prospective founders in the UK’s universities demonstrate the commercial potential of their research.
The government is committed to staying at the forefront of new technology. For example, this Autumn Statement provides £121 million for the UK’s space sector. This investment will pave the way for new space clusters and infrastructure, make progress towards the government’s climate goals by supporting the earth observation industry and deliver new capabilities in low earth orbit satellite communications technology. The government is also building on the £2.5 billion ten-year National Quantum Strategy by publishing an ambitious set of quantum missions, [footnote 151] including a mission to have accessible, UK-based quantum computers capable of running 1 trillion operations by 2035. Other missions focus on quantum networks, medical applications, navigation, and sensors for infrastructure.
The government also remains committed to ensuring early-stage, innovative companies have access to the investment they need to grow and develop. To continue supporting thousands of start-ups and small and medium-sized enterprises (SME) each year who face the biggest challenges in accessing growth capital, the government will legislate to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) to 2035.
To support these innovative businesses to accelerate their growth and scale up, the government is extending the British Business Bank’s Future Fund: Breakthrough programme. This will provide at least £50 million additional investment in the UK’s most promising R&D intensive companies.
It is vital that businesses can access the talent they need, which is why the government is delivering on the Spring Budget 2023 commitment to simplify and expand the UK’s business visitor visa. The includes introducing changes from January 2024 that will broaden and clarify the activities that can be undertaken in an intra-corporate setting, offer wider coverage for the legal services sector and simplify arrangements for those undertaking paid engagements. During 2024 the government will explore further improvements to the business visitor rules alongside the potential for further enhanced provisions linked to trade negotiations. Given these changes relate to short-term business visas, they do not impact on the overall level of net migration. The government is also signing and expanding new and existing Youth Mobility Schemes (YMS) to make sure the next generation of talent have a wide range of opportunities to live, work and travel abroad and experience other cultures. This year the government has increased the places available on the YMS with Australia and Canada by 7,000 and, for 2024, added a further 9,100 places through new and expanded agreements, including with Japan and South Korea. [footnote 152] In 2023 the government has also expanded the eligibility and length of stay available for participants from Canada, New Zealand and Australia.
Supercharging growth of the UK’s SMEs
The vast majority of businesses in the UK are SMEs and they are engines of the economy. [footnote 153] The UK has a reputation as a world-leading location for businesses to start up and grow and the Autumn Statement builds on this. [footnote 154] In addition to freezing the small business rates multiplier in England, the government is announcing a package of support to help SMEs thrive.
One of the key challenges facing SMEs is the cash-flow implications of late payments, which hold small businesses back from investing and innovating. Alongside publication of the Payment & Cash Flow Review Report and action taken through the Procurement Act, the government will lead by example in introducing more stringent payment time requirements for firms bidding for large government contracts. From April 2024, firms bidding for government contracts over £5 million will have to demonstrate they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.
In order for SME leaders to acquire the vital skills and opportunities they need to increase productivity and grow their businesses, the government is expanding the Made Smarter Adoption, programme helping more manufacturing SMEs use advanced digital technologies. The government is also setting up a taskforce to rapidly explore how best to support SMEs to adopt digital technology, committing to delivery of the Help to Grow: Management programme beyond 2024-25; and offering additional support to SMEs to access global markets through UK Export Finance.
To reward work, and so that the self-employed are able to keep more of their hard-earned money, the government will cut and simplify self-employed taxes from 6 April 2024. The main rate of Class 4 self-employed NICs will be cut from 9% to 8%, and the outdated and needlessly complicated Class 2 self-employed NICs will be abolished. Together these cuts will benefit around 2 million self‑employed people and the average self-employed individual on £28,200 will see a saving of £350 in 2024-25.
The government is also announcing that HMRC will rewrite guidance around the tax deductibility of training costs for sole traders and the self-employed, to provide more clarity to business on what costs are deductible. This will ensure that individuals can be confident that updating existing skills, or maintaining pace with technological advances or changes in industry practices, are allowable costs for tax purposes.
Investing in energy security and net zero
Delivering the net zero transition is vital to the UK’s energy security and long-term prosperity. In Powering Up Britain [footnote 155] the government laid out clear and comprehensive plans to meet its energy security and climate targets. As the Prime Minister has stressed, the government will deliver these in a proportionate and pragmatic way, which protects households and plays to the UK’s significant strengths.
The government is therefore focused on securing the investment needed to deliver clean energy and support industry to decarbonise. This approach has already mobilised £198 billion of public and private investment in low-carbon energy since 2010, and seen the UK decarbonise faster than any other G7 country since 1990. [footnote 156] [footnote 157] The cross-economy measures in the Autumn Statement will unlock further investment in the transition in the years ahead.
The UK Emissions Trading Scheme (ETS) plays a vital role in providing businesses with the long-term certainty to plan ahead and decarbonise efficiently. Reforms to the ETS, as set out by the UK ETS Authority in July 2023, will reduce the number of ETS permits available for purchase from government by 45% between 2023 and 2027. It will also extend the scheme to cover emissions from domestic maritime and energy from waste in 2026 and 2028 respectively. This is an important step in achieving net zero ambitions.
In a connected world, the ETS can only be truly effective if action is taken to mitigate the risk of carbon leakage. The government has undertaken extensive consultation on possible measures to mitigate carbon leakage risk including introducing a carbon border adjustment mechanism and will publish its response shortly.
The government is providing support to help firms transition to a resilient, low-carbon and industrially competitive future. This includes spending £185 million on the Industrial Energy Transformation Fund (IETF) to support industrial sites invest in more energy efficient and low-carbon technologies. This grant funding will come from the £6 billion announced at Autumn Statement 2022 to support energy efficiency from 2025, with further allocations set out in due course. The government is also providing around £300 million a year in tax relief in exchange for meeting energy efficiency targets under the new six-year Climate Change Agreement scheme which starts from 2025, and expanding VAT relief available on the installation of energy-saving materials in residential buildings or those used solely for a relevant charitable purpose.
To support continued investment in the UK’s renewable generation capacity, the government will legislate for a new investment exemption for the Electricity Generator Levy (EGL). New projects for which the substantive decision to proceed is made on or after 22 November 2023 will be exempt from the EGL. The government has published a technical note on the exemption and will legislate in an upcoming Finance Bill. The EGL will end as planned on 31 March 2028. The government has also set out the parameters for the next renewables Contracts for Difference auction round, increasing the maximum price that can be received, and will shortly publish further details on growing hydrogen and Carbon Capture, Usage and Storage (CCUS) deployment, ensuring that the government’s world-leading clean energy deployment continues at pace and remains on track to meet the government’s energy security and net zero ambitions.
To further accelerate the UK’s world-leading offshore wind deployment, the government will bring forward legislation to provide the Crown Estate with borrowing and wider investment powers as soon as parliamentary time allows, which will help to unlock a further 20-30GW of new offshore wind seabed rights by 2030. Government is working with The Crown Estate to bring forward additional floating wind in the Celtic Sea through the 2030s, which could see an additional 12GW of generation deployed, alongside the 4.5GW round due to open soon, with the potential to deliver £20 billion of direct investment from deployment in the area. [footnote 158]
Catalysing the growth sectors of the future
At Spring Budget and throughout 2023, the Chancellor has unveiled a package of measures to turbocharge growth in the industries of the future. The Autumn Statement builds on this with further steps to make sure the UK is investing in its strengths and developing its competitive advantage in these sectors.
The manufacturing sector is a vital part of the UK’s economy. It enables levelling up across the country, helps deliver net zero commitments and promotes economic security and resilience. The sector contributes 41% of all UK expenditure on business R&D, 43% of exports, and provides around 2.6 million jobs. [footnote 159] [footnote 160] [footnote 161] These jobs are often highly skilled, are typically located in UK regions with lower gross disposable household income and pay 9% more than the national average. [footnote 162] [footnote 163]
The UK also has a world-leading track record of delivery on decarbonisation, with significant steps taken to strengthen energy security and the broader investment environment. This approach has seen £198 billion of public and private investment into low carbon sectors since 2010. Therefore, the UK will not be looking to match countries such as the US pound for pound on the back of policies like the Inflation Reduction Act.
The UK will take a different approach, continuing to build a positive environment for investment via cross-cutting measures such as full expensing, supported by targeted funding where justified to bolster the UK’s attractiveness as a place to start, grow and invest in manufacturing businesses.
Funding of £4.5 billion has been announced to help unlock private investment in strategic manufacturing sectors, starting in 2025-26 and lasting for five years. Over £2 billion is being made available for the automotive sector to support the manufacturing and development of zero emission vehicles, their batteries and supply chain. £975 million is being made available for the aerospace sector to support the development of energy efficient and zero-carbon aircraft technology. £520 million is being made available for life sciences to build resilience for future health emergencies and capitalise on the UK’s R&D strengths. And £960 million is being made available for green industries to support strong clean energy manufacturing capacity across the UK and seize opportunities from the global net zero transition.
Advanced manufacturing harnesses the UK’s world-leading R&D capabilities and the government is taking further steps to support innovation across the wider sector. The government recently published Dame Angela McLean’s review of the role that regulation can play in driving innovation and growth in advanced manufacturing, alongside the government’s response accepting all recommendations. [footnote 164] The government also published its Critical Minerals Strategy refresh earlier this year and recently committed to extend the Connected and Automated Mobility R&D programme. [footnote 165]
The government is also unlocking new sources of finance for advanced manufacturing. The Chancellor has recently clarified the government’s priorities for the UK Infrastructure Bank to ensure the Bank is able to invest in critical supply chains where it meets the Bank’s strategic objectives, including semiconductor manufacturing and critical minerals. The Bank is actively engaging with the relevant sectors and exploring opportunities in these markets.
Other announcements being taken forward by the government at Autumn Statement which support UK advanced manufacturing firms include expanding the Made Smarter Adoption programme, responding to Lord Harrington’s review of foreign direct investments, championing apprenticeship provision through the growth sectors apprenticeship pilot and providing details of further Investment Zones focused on the sector. The government will shortly set out more on its actions to support investment and growth in the manufacturing sector with the publication of the Advanced Manufacturing Plan and UK Battery Strategy.
This Autumn Statement will boost investment to support the government’s clear plans to deliver net zero and energy security objectives. UK firms are ready to supply vital goods and services to the new global green economy, maximising growth opportunities through the transition.
The UK is already seizing the opportunities and exports within low-carbon and renewable energy industries, which are growing significantly faster than exports from the broader economy. [footnote 166] Not only is the UK a world leader in the deployment of offshore wind, but its industries are also driving the development of innovative Small Modular Nuclear Reactors (SMRs) and investing in the UK’s potential to store an estimated 78 billion tonnes of carbon in the UK continental shelf. [footnote 167]
To ensure the UK continues to build strong supply chains and maximises global growth opportunities, the government is announcing a £960 million Green Industries Growth Accelerator (GIGA). This will support investments in manufacturing capabilities for the clean energy sectors where the UK can gain the clearest strengths: Carbon Capture Utilisation and Storage (CCUS), hydrogen, offshore wind, electricity networks, and nuclear. GIGA will enable the UK to seize growth opportunities through the transition to net zero, unlocking private investment, protecting jobs and creating new ones, and leveraging impact across the wider supply chain. The fund will sit alongside the full range of long-term deployment support set out in Powering Up Britain which will ensure the government delivers the clean energy transition and boosts green investment and job creation across the country.
Digital technology and AI
Digital technologies have radically transformed lives, from smart phones and apps to the internet of things. The UK is harnessing the significant growth potential of digital technologies to continue as the leading European tech ecosystem, which last year was worth more than double Germany’s and three times as much as France’s, and contributed GVA of £158 billion. [footnote 168] Not only does this represent 3 million jobs and 85,000 tech start-ups, [footnote 169] including ground-breaking companies such as DeepMind, but the UK is also taking a world-leading role in developing technologies of the future, like Artificial Intelligence (AI) and quantum computing, ensuring that the UK is at the forefront of shaping how technology transforms lives for the better.
The development of AI has accelerated over the last year, with the release of new [g]enerative AI chatbots such as ChatGPT and Bard. The economic impact of AI is likely to be significant; a recent Goldman Sachs report projected that “generative AI has [the] potential [to] boost global labour productivity by more than 1 percentage point a year in the decade following widespread usage”. [footnote 170] The UK is well placed to capture these gains as third in the world for AI investment; the AI sector already contributes £3.7 billion to the UK economy and employs 50,000 people across the country. [footnote 171]
To realise the many potential benefits of AI, the UK needs to work with international partners to ensure the safe development of advanced AI systems. The UK is taking a leading role in this area, having hosted the world’s first AI Safety Summit earlier this month. The government will be launching the first AI Safety Institute, backed by an initial £100 million investment. In parallel, the government is developing its wider regulatory approach, to balance innovation and safe adoption, publishing its response to the AI white paper by the end of the year, and launching a pilot AI Regulatory Sandbox in the spring. [footnote 172] Later this year the government will be launching the Manchester Prize which will award prizes of up to £1 million to researchers working on the safe, responsible application of AI over the next 10 years.
Key to the UK creating a world-leading AI ecosystem is access to compute, which powers the development of AI models. In the last year, the government has announced significant compute investments, including £900 million at Spring Budget 2023. The government will be investing a further £500 million in compute for AI over the next two financial years bringing the total planned investment in compute to more than £1.5 billion. These investments will allow researchers and SMEs to develop new foundation models and maximise the UK’s potential in AI, enabling, for example, the discovery of new drugs. This complements the government’s £100 million AI Life Sciences Accelerator Mission, announced by the Prime Minister, which will use health data and cutting-edge AI to address some of the most pressing health challenges facing the nation.
Together these investments will support the UK to unlock the potential of AI, from the development and testing of advanced AI models, to creating the conditions for further innovation and the safe application of AI across the economy.
Life sciences is a strength of the UK economy, with the sector critical to the country’s health, wealth and resilience. In May 2023, the government committed £121 million in funding as a first response to Lord O’Shaughnessy’s recommendations on improving the UK’s commercial clinical trial offer. The government has published its full response to the review, supported by an implementation plan, to make the UK one of the best places in the world to conduct clinical research. Up to £20 million of this funding will launch the first Clinical Trial Delivery Accelerator, focused on dementia, to help innovation reach NHS patients even faster.
To build resilience for future health emergencies and to capture and capitalise on the UK’s R&D strengths, the government is providing £520 million in funding from 2025‑26 to support transformational manufacturing investments in life sciences. It is also backing UK innovation by investing £10 million, with an additional £10 million from Scottish Enterprise, in a world class Manufacturing Centre of Excellence in Oligonucleotides. Tackling antimicrobial resistance will be essential for future health resilience, so to mark the 2028 centenary of the discovery of penicillin, the government is granting £5 million seed funding to help launch the Fleming Centre. A collaboration led by Imperial College London and Imperial College Healthcare NHS Trust, the Centre will support the next generation of world-changing health innovations.
The UK is uniquely placed to harness the power of health data to improve patient outcomes. In England the NHS has 1.6 million patient interactions every 24 hours generating real world experience and insights at scale. [footnote 173] The government is therefore announcing a further £51 million for the Our Future Health (OFH) programme, a world-leading resource for health research, to genotype their first 1 million participants and to recruit hundreds of thousands of new volunteers, supporting the development of better ways to prevent, detect and treat diseases. The COVID-19 vaccine showed the UK is one of the best places to launch lifesaving therapies. Building on this legacy, Genomics England, along with a consortium of partners, is announcing the launch of a world first Rare Therapies Launch Pad, generating evidence on whether a pathway for new individualised therapeutics could be implemented in the UK for children with ultra-rare disease.
The government has reached an in-principle agreement with the pharmaceutical industry on the 2024 Voluntary Scheme for Branded Medicines Pricing, Access, and Growth. The scheme is expected to deliver around £14 billion in savings to the NHS across the next five years, as well as supporting rapid patient access to new clinically and cost-effective medicines. A £400 million fund will also be established by industry to support investment in the UK life sciences ecosystem, including improved clinical trial capacity.
The UK has world-leading creative industries at the heart of an increasingly digital world. The sector grew at over one and a half times the rate of the wider economy between 2010 and 2019, [footnote 174] contributing £126 billion in GVA in 2022. [footnote 175] In June 2023, the government published its Sector Vision which set ambitions to grow the creative industries by £50 billion and deliver a creative careers promise to support a million more jobs by 2030. This included £77 million in new government spending, bringing the total announced since the 2021 Spending Review to £310 million. The sector also continues to be supported by significant tax reliefs, which were worth £1.66 billion in the year ending 2022. [footnote 176]
The government expects further growth and a rise in employment as creative industries embrace new technologies. To maximise the benefits of this, the government will further boost the international competitiveness of tax incentives for the UK’s world-leading visual effects sector. The government intends to increase the generosity of the Audio-Visual Expenditure Credit for visual effects expenditure, and will work with industry on how best to design this with the intention of implementing changes to the tax relief from April 2025.
To support the production of film and high-end TV across the UK, the government will provide £2.1 million of new funding next year for the British Film Commission and the British Film Institute Certification Unit. Furthermore, the government will review public investment in R&D spending for the creative industries to a Spending Review timeframe.
Making a long-term investment in skills by delivering a world-class education system
A crucial part of securing Britain’s prosperity for future generations is building a world-class education and skills system. Long-term investment in human capital is crucial for growth and productivity: changes in labour quality contributed to around 15% of growth in labour productivity between 2001 and 2007, and the majority of labour productivity growth in the years after. [footnote 177] This is why the government continues to make year on year increases to school funding in England, boost opportunities for adults to train, upskill and retrain, and, from 2025, transform the student finance system through the Lifelong Learning Entitlement.
In October 2023, the Prime Minister announced a strong action plan to ensure every student has the literacy and numeracy skills they need to thrive through the introduction of the Advanced British Standard. This new Baccalaureate-style qualification will bring the best of A-Levels and T-Levels together, creating a unified structure that puts technical and academic education on equal footing. This reform will ensure every student in England studies some form of maths and English to age 18, boosting basic skills and bringing the UK in line with international peers. It will increase the number of taught hours by 15% for most students aged 16 to 19 and will broaden the number of subjects students take.
The government is funding a down payment of over £600 million over the next two years. This will give teachers in key shortage academic and technical subjects – who are in the first five years of their career – a payment of up to £6,000 per year tax free, including further education colleges for the first time; support students to achieve their maths and English GCSEs where they did not pass first time; improve the quality of maths teaching; and build a deeper understanding of what works in 16-19 teaching and training with a £40 million capital investment into the Education Endowment Fund.
Beyond 16-19 education, the government is supporting employer-based training in England so that adults of all ages can access high quality apprenticeships. The government has transformed apprenticeships to offer a prestigious and high quality alternative route to higher education. In 2021-22, almost a third of all starts were at Level 4 and above compared to only 4% in 2014-15. [footnote 178]
The government continues to work closely with businesses to improve the apprenticeship system to meet the needs of learners, employers and training providers. The government is supporting plans to catalyse the growth sectors by committing £50 million to deliver a two-year apprenticeships pilot to explore ways to stimulate training in these sectors and address barriers to entry in high-value standards.
Boosting growth and investment across the country
To grow the economy, the government is committed to building on the potential of all areas across the UK, and to tackling the unequal spread of opportunity. The recently launched Round 3 of the Levelling Up Fund and the Long-Term Plan for Towns will continue to deliver on this ambition.
At Spring Budget 2023, the government launched the refocussed Investment Zones programme. The government is now going further by extending the Investment Zones programme from five to ten years, which will double the envelope of funding and tax reliefs available in each Investment Zone from £80 million to £160 million, to provide greater certainty to investors. The government is also extending the duration of the tax reliefs available in Freeports from five to ten years to maximise the programme’s impact. To ensure Investment Zones and Freeports can respond nimbly as investment opportunities arise, the government is also creating a new £150 million Investment Opportunity Fund, which will be available over five years.
The government is also announcing the next set of Investment Zones.
- The Greater Manchester Investment Zone will focus on advanced manufacturing and materials and local partners expect it to help to leverage £1.1 billion in private investment and help to create 32,000 jobs in the region over the next 10 years.
- The West Midlands Investment Zone will focus on advanced manufacturing and local partners expect it to help to leverage £2 billion in private investment and help to create 30,000 jobs in the region over the next 10 years.
- The East Midlands Investment Zone, with a focus on green industries and advanced manufacturing, is expected by local partners to help to leverage £383 million in private investment and help to create 4,200 jobs in the region over the next 10 years.
All of these Investment Zones have received anchor investment from private sector companies.
The government continues to make good progress on developing the Investment Zones for the North East and Tees Valley. The government is also confirming that there will be two Investment Zones in Wales; one located across the Cardiff and Newport area, and delivered by the South East Wales Corporate Joint Committee, and another focusing on the Wrexham and Flintshire region delivered by the North Wales Corporate Joint Committee. The government has now confirmed details of 6 of 13 Investment Zones in the UK and will work with local partners with the aim of confirming details of all Investment Zones by summer 2024.
To deepen devolution in England and further empower local leaders to drive growth in their areas, the government has agreed with local partners a Memorandum of Understanding outlining the approach to the single funding settlements which will be implemented at the next Spending Review for the West Midlands and Greater Manchester Combined Authorities. The government is also publishing a new ‘Level 4’ of the devolution framework. Devolved institutions with a directly elected leader that meet eligibility requirements will be able to draw down from this framework, which delivers deeper powers alongside new scrutiny expectations. The powers include new levers over local transport, reflecting the substantial progress made towards the National Infrastructure Commission’s recommendation to devolve local transport powers and funding to local authorities. The government has already agreed to negotiate a further trailblazer devolution deal with the North East and discussions have now commenced with a view to finalising a deal in spring 2024. The deal will empower local leaders to develop existing and potential industrial strengths across the region, from creative industries to advanced manufacturing.
The government is also announcing four new devolution deals and an intention to expand Level 2 devolution to eligible councils across England that represent a whole county or functional economic area. This includes new Level 3 deals with Greater Lincolnshire, and Hull and East Yorkshire, and Level 2, non‑mayoral, deals with Cornwall and Lancashire. Combined, these new deals, and the extended Level 2 offer, could increase the proportion of people in England benefiting from devolved powers to over two-thirds.
Building on this support for growth across the UK, the government is announcing:
- £80 million for the expansion of the Levelling Up Partnerships programme to Scotland, for Na h-Eileanan an Iar, Argyll and Bute, Dundee, and the Scottish Borders, and will consider how to extend the programme further;
- over £50 million to support regeneration in places across the UK: Bolsover, the Isles of Scilly, Warrington, North Norfolk, Eden and Monmouthshire;
- support for the Hay festival in Wales;
- the reallocation of £20 million from within the Inverness & Highland City Region Deal to fund essential landside infrastructure improvements for the Corran Ferry, subject to agreement through the appropriate Deal governance structures; and
- confirming £3 million for the Tackling Paramilitarism Programme in Northern Ireland
Investing in housing supply
Building homes in the right places, where people want to live and work, will support economic growth across the UK and make home ownership a reality for more people.
The government is investing an additional £32 million across housing and planning to unlock thousands of homes across the country. This includes additional funding to tackle planning backlogs in Local Planning Authorities (LPA), alongside further reforms to streamline the system through a new Permitted Development Right to enable one house to be converted into two homes.
Funding will also accelerate the delivery of new high quality housing in Cambridge, Leeds and London. As part of this, the government will support the Cambridge Delivery Group to drive the long-term vision for Cambridge by exploring the case for a development corporation. The government is also continuing to progress its commitment to deliver East West Rail, with a statutory consultation due next year and, as part of Network North, has committed to providing £2.5 billion for a West Yorkshire mass transit system. Subject to the business case, the government will also provide funding for a rapid transit bus network in Thamesmead, as part of its vision for a new Docklands 2.0.
Today the government is also confirming £110 million will be made available through the Local Nutrient Mitigation Fund. This will support LPAs affected by nutrient neutrality rules to deliver high quality local nutrient offsetting schemes, unlocking up to 40,000 homes over the next five years. [footnote 179]
The government remains committed to building the affordable homes this country needs, building on the success of the existing Affordable Homes Guarantee Scheme through a £3 billion extension which will help the scheme deliver 20,000 new homes, as well as improving the quality and efficiency of thousands more. [footnote 180] The government is also extending until June 2025 the Public Works Loan Board policy margin announced at Spring Budget 2023 to support local authority investment in social housing, as well as delivering an additional 2,400 homes by allocating £450 million to a third round of the Local Authority Housing Fund, which will provide additional funding for new Temporary Accommodation as well as homes for Afghan refugees.
The government will extend ‘thank you’ payments into a third year for Homes for Ukraine sponsors across the UK. These will remain at £500 per month and reflect the ongoing generosity of hosts in supporting those who have fled the war. The government is also providing £120 million funding for the devolved administrations and local authorities in England to invest in homelessness prevention, including to support Ukrainian households who can no longer remain in sponsorship.
As well as building the homes of the future, this government is committed to supporting home movers with a range of measures to improve the buying and selling process, including pilots to develop property tech products and digitise local council property data.
Box 4.B Creating a simpler, more effective tax system
The government has four main objectives on tax simplification, to support growth and fairness:
- Tax rules should have a clear consistent rationale and be easy to understand.
- The burden of compliance and administration should be proportionate for taxpayers and HMRC and it should be easy for taxpayers to get their tax right.
- Taxpayers should be able to understand their obligations and options particularly at key lifecycle points, such as when they do something for the first time or infrequently.
- Tax policy should not unnecessarily distort the decisions of taxpayers and result in poorly informed choices.
The government will measure annual progress against these objectives, focusing on taxpayers’ experience and prioritising the impact of complexity on individuals and small businesses. The government will update on these metrics before the end of 2023-24.
Building on reforms announced at Spring Budget 2023, the government is now making it easier for small businesses as they set up and grow by:
- Expanding the ‘cash basis’ – a simplified way for over four million sole traders and partners to calculate and pay their Income Tax.
- Introducing a package of changes to simplify the design of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), that will benefit around 1.7 million businesses and landlords set to be mandated to use MTD.
- Merging the R&D Expenditure Credit (RDEC) and the SME scheme by combining the best parts of both reliefs under a common set of rules and removing the situation where companies have to transition between the SME and RDEC schemes.
As announced in the Spring, the government is undertaking a systematic review of guidance and key forms for small business and has already made improvements: including enhanced guidance when checking if you need to submit an ITSA return; new interactive guidance to help businesses register for ITSA; and improved guidance making it easier to report VAT errors.
To simplify the experience of interacting with the tax system for individuals, the government has already increased to £150,000 the threshold for individuals with income taxed only through Pay As You Earn to file a Self Assessment return. From the tax year 2024-2025, it is abolishing the threshold altogether. These changes remove the requirement for up to 338,000 taxpayers to submit a return.
To simplify the experience for the self-employed who currently have to pay two National Insurance contributions (NICs) charges the government will abolish the outdated and needlessly complex Class 2 self-employed NICs. From 6 April 2024 the government will remove the requirement to pay Class 2 NICs but will maintain access to contributory benefits including the State Pension. Those currently paying voluntarily will still be able to do so. The government will set out next steps on Class 2 reform next year. As part of this reform the government will protect the interests of lower paid self-employed people who currently pay Class 2 NICs voluntarily to build entitlement to certain contributory benefits including the State Pension. This change simplifies the tax affairs of around 2 million people.
The government is also making it easier for people to choose the best ISA accounts for their needs and move money between them.
The government is also simplifying the tax system for large businesses. Tax professionals have welcomed the simplicity of full expensing that was due to come to an end in March 2026, and the government has announced that this will be made permanent. The government will take this opportunity to determine how the capital allowances legislation could be simplified in consultation with industry.
Tax simplification is an ongoing priority for this government, and it will aim to demonstrate progress on this agenda at every fiscal event.
International taxation – OECD Pillar 2
The government is committed to delivering the landmark G20/OECD two-pillar reform to the international tax system in response to the challenges posed by the digitalisation of the economy, which was brokered by the Prime Minister as part of the UK’s G7 presidency in 2021.
Pillar 2, which is being implemented from 2023, will ensure Multinational Enterprises (MNEs) will be subject to a minimum 15% effective tax rate in every jurisdiction in which they operate. Implementation of these rules will protect the UK from aggressive tax planning by large multinationals, help ensure that profits made in the UK are taxed in the UK, and level the playing field for tax competition that has been tipped in favour of no or low tax jurisdictions.
The Multinational Top-up Tax, Domestic Minimum Tax and Undertaxed Profits Rule are expected to raise approximately £12.7 billion in the UK in total over the next 6 years. If the UK had not implemented these rules, this tax would have been collected elsewhere.
It is important that the UK implements Pillar 2 to a similar timeline as other countries. More than 30 countries across the world have taken steps towards implementation. Other countries moving to implement Pillar 2 from 31 December 2023 or 1 January 2024 include members of the European Union, where a Directive obliges all but the smallest Member States to implement Pillar 2 from 31 December 2023, Australia, Canada, New Zealand, South Korea, Switzerland and Vietnam. Japan is implementing from 1 April 2024. Jurisdictions implementing in 2025 so far include Thailand and Singapore with many more countries expected to follow. The government will continue to monitor international developments on implementation.
This chapter sets out all Autumn Statement 2023 policy decisions. Unless stated otherwise, the decisions set out are ones which are announced at the Statement. Table 5.1 shows the cost or yield of all government decisions accounted for at Autumn Statement 2023 which have a direct effect on Public Sector Net Borrowing (PSNB) in the years up to 2028-29. This includes tax measures, changes to aggregate Departmental Expenditure Limits (DEL) and measures affecting annually managed expenditure (AME). The government is also publishing the methodology underpinning the calculation of the fiscal impact of each policy decision. This is included in ‘Autumn Statement 2023: policy costings’ published alongside the Autumn Statement.
Where measures set out in the Autumn Statement do not apply UK-wide, the government will provide the devolved administrations with funding through the Barnett formula in the usual way. The Scottish and Welsh Governments’ funding will also be adjusted in relation to tax and welfare devolution as set out in their respective fiscal frameworks.
Table 5.1: Autumn Statement 2023 policy decisions (£ million)(1)
Economic and fiscal outlook.
Research fund on risks to the economic and fiscal outlook – The government will provide up to £10 million of funding over 2024-25 and 2025‑26 to finance research on risks to the economy and public finances, including the understanding of risk impacts, their potential mitigations and response preparations.
Economic Advisory Council – The Chancellor is standing down the Economic Advisory Council (EAC), which was set up last autumn to provide independent advice on economic and financial market issues. The government thanks the Council for their expertise, and will continue to seek advice from experts on issues under consideration including long-term economic challenges.
DEL Spending Assumption from 2025-26 to 2028-29 – Planned departmental resource spending for the years beyond the current Spending Review period (2025-26 to 2028-29) will continue to grow at 1% a year on average in real terms, excluding the funding provided to local authorities in 2024-25 as part of the one-year Retail, Hospitality, and Leisure relief scheme. Departmental capital spending will follow the cash profile agreed at Spring Budget 2023, with new commitments funded in addition to this, including further support for levelling up programmes and business access to finance.
Support for Veterans – The government is providing an additional £10 million to support the Veterans’ Places, People and Pathways Programme to increase support to a significant community of vulnerable veterans throughout the UK and enable it to become self-sustaining.
Apprenticeships – The government is committing a further £50 million for a 2-year pilot to explore ways to stimulate training in growth sectors and address barriers to entry in high-value apprenticeships.
Support for affected communities within the UK following the conflict in Israel and Gaza – The £3 million of additional funding that the government has already provided to the Community Security Trust will be maintained in 2024-25. In addition, the government is also providing up to £7 million over three years for organisations like the Holocaust Educational Trust to help tackle antisemitism in schools and universities.
Productivity Programme – The Chief Secretary to the Treasury is running an ambitious public sector productivity programme.
Official Development Assistance (ODA) Spending – The government has committed to return to spending 0.7% of Gross National Income (GNI) on ODA when it is not borrowing for day-to-day spending and underlying debt is falling, as reviewed each year against the latest fiscal forecast for the following year. Autumn Statement 2023 confirms that these conditions have not been met for 2024-25.
Tariff suspensions – The government is maintaining tariff-free imports on over 2,000 goods to provide continuity and avoid unnecessary costs for UK businesses. This measure will extend, for five years, tariff suspensions on goods ranging from vaccine components to ingredients used by UK food producers.
Uplift to the UK’s Core Voluntary Contribution to the World Health Organisation (WHO) – The government is increasing its core funding to the WHO by £2 million for underfunded priorities.
Cutting taxes and rewarding hard work
National Insurance contributions (NICs) rates – The government will cut the main rate of Class 1 employee NICs from 12% to 10%. This will take effect from 6 January 2024. The government will also cut the main rate of Class 4 self-employed NICs from 9% to 8%. This will take effect from 6 April 2024.
From 6 April 2024 the government will also ensure that no one will be required to pay Class 2 self-employed NICs. Details of this change are:
From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits including the State Pension.
The government will set out next steps on Class 2 reform next year. As part of this reform the government will protect the interests of lower paid self-employed people who currently pay Class 2 NICs voluntarily to build entitlement to certain contributory benefits including the State Pension.
National Minimum & Living Wage Uprating – From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. Young people and apprentices on the National Minimum Wage (NMW) will also see a boost to their wages.
Restart scheme – The government is expanding its programme of employment support for the long-term unemployed for two years from 2024 across England and Wales. Those who have been on Intensive Work Search for 6 months will now be eligible, as opposed to the previous requirement of 9 months. In addition, work coaches will track the activity of participants to ensure they comply with requirements of the Restart programme.
Post-Restart Claimant review point – From late 2024, Universal Credit claimants in England and Wales who have completed Restart and remain unemployed after 18 months will undergo a review conducted by a work coach. Claimants who do not agree to revised claimant commitments without a good reason, which could include attending a mandatory work placement or new intensive work search activities, will have their claim closed.
Post-Restart employment schemes, including Mandatory Work Placements – From late 2024, the government will begin rolling out new schemes to support Universal Credit claimants in England and Wales, who have completed Restart and remain unemployed after 18 months. Following the post-Restart claimant review point, claimants will be mandated to attend a time-limited work placement or undertake other intensive work activity.
Additional Jobcentre Support – The government is expanding Additional Jobcentre Support currently live in 90 Jobcentres in England and Scotland to trial intensive support for people who have been receiving Universal Credit for 7 weeks, in addition to the support after 13 and 26 weeks announced at Spring Budget 2023.
Strengthening the application of Universal Credit sanctions – The government is investing in digital tools that will allow work coaches to track claimant attendance at job fairs and interviews organised by a Jobcentre Plus in Great Britain.
Closing claims for disengaged UC claimants on open-ended sanction for over 6 months – The government will take steps to close the claims of sanctioned Universal Credit claimants in Great Britain who have not engaged with Jobcentre support for over 6 months and are solely eligible for the Universal Credit standard allowance.
Investigating sanctioned claimants through the Targeted Case Review – The government will use its Targeted Case Review process to investigate sanctioned Universal Credit claimants in Great Britain who have not engaged with Jobcentre support for over eight weeks who are still receiving some Universal Credit payments, ensuring they receive the right entitlement.
Individual Placement and Support expansion – The government will expand access to Individual Placement and Support (IPS) for severe mental illness, an employment support service within community mental health teams in England, to reach an additional 100,000 people over the next 5 years.
NHS Talking Therapies expansion – The government will expand access to NHS Talking Therapies in England, the flagship NHS programme for treating mild and moderate mental health conditions, to reach an additional 384,000 people over the next 5 years, and increase the number of sessions available to those that use the service.
Universal Support expansion – Universal Support is a supported employment programme in England and Wales for people with a disability or health condition. The government will double the number of yearly places on Universal Support to 100,000.
Occupational Health – The government will establish an expert group to develop a voluntary minimum framework which will set out the minimum level of Occupational Health intervention that employers could adopt to help improve employee health at work.
Work Capability Assessment (WCA) gateway reform – The government is reforming the activities and descriptors in the Work Capability Assessment for new claimants in Great Britain, to support more people into employment, with implementation occurring from 2025.
Fit note reform – The government will explore end-to-end reforms of the fit note process to support more people to resume work after a period of illness. Trailblazer trials, in a small number of areas in England, will test changes to make referrals to health and employment services easier and improve digital access for patients. They will include trigger points for referrals for people who have received a fit note for a prolonged period of time and new designs of the fit note form. The government will launch a consultation in 2024 on wider reforms, to examine providing individuals whose health affects their ability to work, with easy and rapid access through the fit note process to specialised support for a return to work.
Supporting vulnerable people
Raising Local Housing Allowance (LHA) rates – In April 2024, LHA rates in Great Britain will be raised to the 30th percentile of local market rents.
Uprating of benefits – The government is increasing working age benefits in line with inflation, measured by September CPI which is 6.7% this year. The government is also maintaining the Triple Lock. The basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with earnings growth. This is measured by the usual metric of annual earnings growth in May-July, which is 8.5% this year. Over 19 million families will see their benefit payments increase from April 2024. Some disability benefits are devolved in Scotland, so it is for the Scottish Government (SG) to decide uprating. Department for Work and Pensions (DWP) benefits are fully devolved in Northern Ireland, so it is for the Northern Ireland Executive to decide uprating in Northern Ireland.
DWP: new powers to tackle fraud and error – The government is legislating to give DWP further access to claimant data to better identify fraud and error in the welfare system in Great Britain.
Personal Independence Payment (PIP) easements – DWP is continuing operational measures to reduce the waiting time for new PIP claims in England & Wales. DWP’s ability to use these measures has been extended until November 2024, to ensure that new disability benefit claimants are not facing excessive wait times to have their benefits claims processed.
Universal Credit surplus earnings – The government will maintain the surplus earnings threshold for Universal Credit claimants in Great Britain at £2,500 for a further year until April 2025.
Universal Credit: Severe Disability Premium Transitional Element rates – The government will increase the rates of the Severe Disability Premium Transitional Element to provide further support for legacy benefit claimants in Great Britain that naturally migrate to Universal Credit.
Increasing the Minimum Income Floor for self-employed lead carers on Universal Credit – The government will increase the level of the Minimum Income Floor in Great Britain for lead carers of children aged 3-12 who are self-employed. This will align it with the new work-related activity requirements for employed lead carers, which were announced at Spring Budget 2023.
Tackling the Economic Impacts of Domestic Abuse (TEIDA) Fund – The government will make £10 million of additional funding available in 2024-25 for projects that aim to understand the impacts of domestic abuse on the labour market, support victims of domestic abuse in the workplace or prevent victims experiencing further abuse.
Expanding the Flexible Fund for victims of domestic abuse – The government will provide £2m of additional funding to expand the Flexible Fund, which trials an innovative new approach to provide one off payments to victims of domestic abuse. This support will reduce the financial pressure on victims to return to the abuser and will enable victims to set themselves up sustainably, for example by securing long term accommodation.
Help to Save – The government will reform the Help to Save scheme for low-income workers and will publish proposals in a response to the consultation on Help to Save Reform, as well as consulting on delivery of the new scheme.
Personal Tax and Savings
ISA: Allowing multiple ISA subscriptions – The government will allow multiple subscriptions to ISAs of the same type every year from April 2024.
ISA: Allowing partial transfers between providers – The government will allow partial transfers of ISA funds in-year between providers from April 2024.
ISA: Removing the requirement to reapply for an existing ISA annually – The government will remove the requirement to reapply for an existing dormant ISA from April 2024.
ISA: Expanding the Innovative Finance ISA to include Long-Term Asset Funds – The government will allow Long-Term Asset Funds to be permitted investments in the Innovative Finance ISA from April 2024.
ISA: Expanding the Innovative Finance ISA to include open-ended property funds with extended notice periods – The government will allow open-ended property funds with extended notice periods to be permitted investments in the Innovative Finance ISA from April 2024.
ISA: Allowing certain fractional shares contracts as a permitted investment – The government intends to permit certain fractional shares contracts as eligible ISA investments and will engage with stakeholders on implementation.
ISA: Digitalise the ISA reporting system – The government is announcing the digitalisation of the ISA reporting system to enable the development of digital tools to support investors.
ISA: Harmonise ISAs to those over 18 years of age – The government will harmonise the account opening age for any adult ISAs to 18 from April 2024.
ISA, JISA, LISA & CTF Annual Limits – The government is freezing the Individual Savings Account (£20,000), Junior Individual Savings Account (£9,000), Lifetime Individual Savings Account (£4,000 excluding government bonus) and Child Trust Fund (£9,000) limits at their current levels for 2024-25.
LTA Abolition – The government will legislate in the Autumn Finance Bill 2023 to remove the Lifetime Allowance. The measure will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements. This will take effect from 6 April 2024.
Uprating Blind Person’s Allowance and Married Couple’s Allowance for 2024-25 – The government will uprate the Blind Person’s Allowance (BPA) and the Married Couple’s Allowance (MCA) by the September CPI figure of 6.7% in 2024-25. The BPA will be valued at £3,070 and the MCA will be valued at between £4,280 and £11,080. This decision represents no policy change, as it confirms the default position for these allowances to be uprated by CPI, as set out in the Income Tax Act 2007.
Taxation of the pension remedies for Members of Parliament, Members of the Senedd and Members of the Legislative Assembly – The government will legislate in the Autumn Finance Bill 2023 to modify how the pensions tax framework applies to certain redress payments made from the Parliamentary Contributory Pension Fund, the Members of the Senedd Pension Scheme, and the Assembly Members’ Pension Scheme. This will align scheme members’ tax treatment with that of the wider public sector in relation to the McCloud judgment.
Off-Payroll Working (IR35) – calculation of PAYE liability in cases of non‑compliance – The government will legislate in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules.
National Insurance contributions rates and thresholds – The government will freeze the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) at 2023-24 levels in 2024-25. For those paying voluntarily, the government will also freeze Class 2 and Class 3 National Insurance contribution (NIC) rates at their 2023-24 levels in 2024-25. The LEL will remain at £6,396 per annum (£123 per week) and the SPT will remain at £6,725 per annum. The main Class 2 rate will remain at £3.45 per week, and the Class 3 rate will remain at £17.45 per week. This will not affect existing arrangements for payments of voluntary Class 2 or Class 3 NICs connected with previous tax years.
Extending the Employer NICs relief for employment of veterans – The government is extending the NICs relief for employers of eligible veterans for one year. The relief means businesses pay no employer NICs on annual earnings up to £50,270 for the first year of a qualifying veteran’s employment in a civilian role.
Legislative correction to Scottish Government’s Carer Allowance Supplement reference – A technical change will be made to Table A of section 660 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) in the Autumn Finance Bill 2023, to ensure that the legislative reference to the Scottish Government’s Carer Allowance Supplement is correct.
Announcement of future guidance changes to tax relief for self-employed – The government is announcing that HMRC will rewrite guidance around the deductibility of training costs for sole traders and the self-employed. This measure will clarify the guidance to ensure that individuals can be confident that updating existing skills, maintaining pace with technological advances, or changes in industry practices are allowable costs when calculating the taxable profits of a business.
Simplifying Making Tax Digital for Income Tax Self Assessment – The government is announcing the outcome of the review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses. This includes maintaining the current MTD threshold at £30,000 and design changes to simplify and improve the system. These changes will take effect from April 2026. The government is also legislating in the Autumn Finance Bill 2023 to ensure taxpayers, who join MTD from 6 April 2024, are subject to the government’s new, fairer penalty regime for the late filing of tax returns and late payment of tax.
Response to consultation on taxation of environmental land management and ecosystem service markets – At Spring Budget 2023, the government launched a consultation on the taxation of environmental land management and ecosystem service markets. This closed on 9 June 2023. The government is currently reviewing responses to this consultation and will give a further update in Spring 2024.
Investment in HMRC debt management capability – The government is investing a further £163 million to improve HMRC’s ability to manage tax debts. This will allow HMRC to better distinguish between those who can afford to settle their tax debts, but choose not to, from those who are temporarily unable to pay and need support. HMRC will also expand its debt management capacity to support both individual and business taxpayers out of debt faster and collect debts that are due.
Construction Industry Scheme (CIS) reform: reforms to the Gross Payment Status test – The government will introduce reforms in the Autumn Finance Bill 2023 to the Construction Industry Scheme, including adding VAT as part of the Gross Payment Status (GPS) compliance test, giving HMRC more power to remove GPS immediately in cases of fraud. Alongside this, the government is also announcing simplifications to other aspects of the scheme, which will be subject to technical consultation.
Tougher consequences for promoters of tax avoidance – The government is legislating in the Autumn Finance Bill 2023 to introduce tougher consequences for promoters of tax avoidance schemes. These include a new criminal offence for those who continue to promote avoidance schemes after receiving a notice requiring them to stop; and a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance, including those who control or exercise influence over a company. These changes will take effect from Royal Assent of the Autumn Finance Bill 2023.
Improving the data HMRC collects from its customers – The government is legislating in the Autumn Finance Bill 2023 to require employers, company directors, and the self-employed to provide new or improved data to HMRC to enable better outcomes for citizens and businesses. These changes will take effect from the tax year 2025-26.
Reforming requirements to file a Self Assessment tax return – The government will no longer require individuals with income taxed only through Pay As You Earn to file a Self Assessment return from 2024-25.
Capital allowances: permanent full expensing – Full expensing will be made permanent in the Autumn Finance Bill 2023, so that investments made by companies in qualifying plant and machinery, after 1 April 2026, will continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first-year allowance for special rate (including long life) assets. Cars, assets for leasing and second-hand assets will be excluded from these 100% and 50% first-year allowances.
Capital allowances: Technical consultation on extending full expensing to assets for leasing – Assets for leasing remain excluded from full expensing. The government will continue to consider whether there is a case to extend full expensing to leasing. The government will publish a technical consultation in due course to seek input on draft legislation which will help to determine whether error and abuse risks are appropriately mitigated. The government will consider consultation responses before reaching any final decision.
Business rates: multiplier – For 2024-25, the small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be uprated by September CPI to 54.6p.
Business rates: retail, hospitality, and leisure relief – The current 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties is being extended for 2024-25, a tax cut worth £2.4 billion. Around 230,000 RHL properties in England will be eligible to receive support up to a cash cap of £110,000 per business.
New Burdens Funding – English Local Authorities will be fully compensated for the loss of income as a result of these business rates measures and will receive new burdens funding for administrative and IT costs.
Stamp Duty and Stamp Duty Reserve Tax – Widening access to the Growth Market Exemption – The government is extending the Growth Market Exemption, a relief from Stamp Duty (SD) and Stamp Duty Reserve Tax (SDRT), to include smaller, innovative growth markets. It will also increase the threshold for the market capitalisation condition that is used within the exemption from £170 million to £450 million. These changes will be included in the Autumn Finance Bill 2023 for implementation from 1 January 2024.
Offshore Receipts in respect of Intangible Property (ORIP) – The government will abolish the ORIP rules in respect of income arising from 31 December 2024. ORIP’s repeal will be legislated for in an upcoming Finance Bill, and take place alongside the introduction of the Pillar 2 Undertaxed Profits Rule, which will more comprehensively discourage the multinational tax-planning arrangements that ORIP sought to counter.
Post Office Compensation Schemes, Corporate Entities – The government will legislate in the Autumn Finance Bill 2023 to exempt from Corporation Tax compensation payments made under the Historical Shortfall Scheme (HSS), Group Litigation Order (GLO) schemes, Suspension Remuneration Review (SRR) or Post Office Process Review Scheme (PPR). The legislation will align the taxation of onward payments of compensation to that of individual recipients.
OECD Pillar 2 – The government will introduce the Undertaxed Profits Rule, which forms part of the G20-OECD global minimum tax framework, in the UK for accounting periods beginning on or after 31 December 2024, with legislation included in an upcoming Finance Bill. It will also make technical amendments to the Multinational Top-up Tax and Domestic Top-up Tax legislation through the Autumn Finance Bill 2023.
Real Estate Investment Trusts (REITs) – Further to the publication of draft legislation on 18 July 2023, the government will make amendments to the rules for Real Estate Investment Trusts (REITs) to enhance the competitiveness of the regime. Changes will variously take effect from Royal Assent of the Autumn Finance Bill 2023, apply to accounting periods ending on or after 1 April 2023, or are deemed to have always had effect.
Merger of R&D tax reliefs – The existing Research and Development Expenditure (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 to be claimed in the merged scheme. Merging schemes is a significant tax simplification, including an aligned set of qualifying rules and a more visible above the line credit. The notional tax rate applied to loss-makers in the merged scheme will be lowered from 25% as per the current RDEC scheme, to 19%. A note setting out the key changes to the policy following the technical consultation is published alongside the Autumn Statement, ahead of it being legislated for in the Autumn Finance Bill 2023.
R&D tax reliefs: additional tax-relief for R&D intensive loss-making SMEs – The intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%, bringing approximately 5,000 more R&D intensive SMEs into scope of the relief. The government will also introduce a one-year grace period, so that companies that dip under the 30% qualifying R&D expenditure threshold will continue to receive relief for one year. Businesses will be able to claim for expenditure incurred from 1 April 2023 once the Autumn Finance Bill 2023 has received Royal Assent, with the reduction in intensity threshold and grace period coming into effect for accounting periods beginning on or after 1 April 2024.
R&D tax reliefs: removing nominations and voiding assignments – From 1 April 2024, R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, subject to limited exceptions. In addition, no new assignments of R&D tax credits will be possible from 22 November 2023. This means that in most circumstances payments of R&D tax reliefs will be paid directly to the company that claims for the R&D, ensuring they have full oversight of the claim, and receive payment more quickly. This will be legislated in the Autumn Finance Bill 2023.
Closing the R&D review – At Spring Budget 2021, the government launched a review of R&D tax reliefs to ensure the UK remains a competitive location for cutting edge research, the reliefs continue to be fit for purpose and taxpayer money is effectively targeted. The government is now concluding that review with the announcement of the merged scheme. Further action may needed to reduce the unacceptably high levels of non-compliance in the R&D reliefs, and HMRC will be publishing a compliance action plan in due course. The government will also continue working with industry to develop the enhanced support for R&D intensive SMEs, and consider further simplifications.
Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) extension – The government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses for the EIS and VCT from 6 April 2025 to 6 April 2035.
Annual Tax on Enveloped Dwellings (ATED): annual increase – The annual chargeable amounts for ATED will be uprated by the September CPI figure of 6.7% for the 2024-25 ATED charging period. This uprating is a routine change, as set out in existing primary legislation. The government will implement this change in the usual way through a Treasury Order.
Expanding the Cash Basis – Following a consultation at Spring Budget 2023, the government is expanding and simplifying the income tax cash basis for the self-employed and partnerships. These changes will take effect from 6 April 2024, for 2024-25 and will be included in the Autumn Finance Bill 2023.
Van Benefit Charge and Car & Van Fuel Benefit Charges – The government will maintain the Van Benefit Charge and the Car & Van Fuel Benefit Charges at 2023-24 levels for 2024-25.
Vehicle Excise Duty (VED) uprating & Heavy Goods Vehicles (HGV) VED and HGV levy freeze – The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2024 in the Autumn Finance Bill 2023. To support the haulage sector, VED for HGVs and the HGV levy will both remain at 2023-24 rates for 2024-25.
VAT Treatment of Private Hire Vehicles – The government will consult in early 2024 on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC.
Women’s Sanitary Products – The government will extend the scope of the current VAT zero rate relief on women’s sanitary products to include reusable period underwear from 1 January 2024.
Alcohol duty – The government will freeze alcohol duties until 1 August 2024 and delay its annual uprating decision to Spring Budget 2024 to give businesses time to adapt to the duty system introduced on 1 August 2023.
Tobacco Duty Rates – Duty rates on all tobacco products will increase by RPI +2%. To reduce the gap with cigarette duty, the rate on hand-rolling tobacco will increase by RPI + 12% this year. These changes will take effect from 6pm on 22 November 2023 and will be included in the Autumn Finance Bill 2023.
Gaming Duty – The Gross Gaming Yield bandings for gaming duty will be frozen from 1 April 2024 until 31 March 2025.
Tax Treatment of Remote Gambling – The government will consult shortly on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through a three-tax structure.
VAT Retail Export Scheme – The government is grateful for industry submissions on the VAT Retail Export Scheme and the associated airside scheme (tax-free shopping). The government will continue to accept representations and consider this new information carefully, alongside broader data.
Electricity Generator Levy: New Investment Exemption The government will legislate so that, where the substantive decision to proceed with a project to create a new electricity generation station or expand an existing generating station is made on or after 22 November 2023, receipts from that new generating station or additional capacity will not be subject to the Electricity Generator Levy.
Infrastructure, planning and regulation
Transmission Acceleration Action Plan – The government has announced a full response to the Electricity Network Commissioner’s report on accelerating electricity transmission network build, reducing the end-to-end process from 14 years to 7 years on average. Supporting this, the government has published proposals on community benefits for electricity transmission infrastructure and updated Energy National Policy Statements.
Connections Action Plan – The government has announced a joint action plan with Ofgem to drastically reduce the time it takes viable projects to connect to the electricity grid, ensuring Great Britain remains one of the best places in the world to connect.
NIC study on electricity distribution networks – The government is commissioning the National Infrastructure Commission to undertake a study on making the electricity distribution network fit for net zero.
Infrastructure planning – The government has published its response to the National Infrastructure Commission’s study on infrastructure planning reforms, with measures to return consent times to two and a half years on average, is designating low carbon infrastructure as a critical national priority in updated Energy National Policy Statements, and will consult on amending the National Planning Policy Framework to ensure that the planning system prioritises the rollout of electric vehicle charging infrastructure, including EV charging hubs, and also introduce new permitted development rights to end the blanket restriction on heat pumps one metre from a property boundary in England.
Planning system performance reforms – The Department for Levelling Up, Housing and Communities will bring forward plans for authorities to offer guaranteed accelerated decision dates for major developments in England in exchange for a fee, ensuring refunds are given where deadlines are not met and limiting use of extension of time agreements. This will also include measures to improve transparency and reporting of planning authorities’ records in delivering timely decision-making.
Support for substantial commercial development – The government will incentivise greater use of Local Development Orders to ensure key commercial developments are approved faster.
Consultation to Strengthen Economic Regulation – The government is consulting on proposals to strengthen the regulation of the energy, water and telecoms sectors, focussing on encouraging investment and growth.
Strengthening the regulators’ Growth Duty: Consultation – The government is publishing and consulting on new draft statutory guidance to update and strengthen the current Growth Duty guidance for regulators, asking regulators to report for the first time on actions taken under the Growth Duty, and monitoring the quality of reporting. The guidance will include a new expectation for regulators to deliver year-on-year improvements in approval times.
Government response to consultation on extending the Growth Duty to Ofcom, Ofwat and Ofgem – The government is extending the Growth Duty to these economic regulators and will introduce secondary legislation in 2024 to do so.
National Infrastructure Commission (NIC) study on connected and autonomous vehicles and mobility – The government is commissioning the NIC to undertake a study on how connected and autonomous vehicles and mobility can deliver growth.
Using smart regulation to boost market competition –The government is publishing a strategic steer to CMA, a consultation on options to reform the airport slot allocation system, and kickstarting a Smart Data Big Bang to explore potential of utilising new powers in the Digital Protection and Digital Information Bill across 7 sectors: energy, banking, finance, retail, home-buying, transport and telecoms. The government is also introducing proposals to tackle hidden fees online and accepting the CMA’s recommendations to improve the clarity of price labelling in stores.
Unlocking investment in growth through pension funds, the financial system, and international investment offer
Master Trust Review – The government is publishing a review of the Master Trusts market, five years after the 2018 Master Trusts regulations came into force, including market trends and the future of regulation and supervision.
Update on implementing the Value for Money framework – The government welcomes the Financial Conduct Authority (FCA) and the Pensions Regulator (TPR) announcements on next steps towards implementing the Value for Money framework in the defined contribution workplace pensions market. The FCA will consult on rules for contract-based schemes in Spring 2024, working closely with the government and TPR for consistency with the development of legislative requirements for trust-based schemes. In the meantime, actions from the TPR will strengthen their existing supervisory approach.
Update on saver choices at retirement – The government is publishing an update that proposes placing duties on occupational pensions trustees to offer decumulation services and products at an appropriate quality and price when savers access their pension assets, either themselves or through a partnership arrangement. It also sets out the intention to further explore the development and wider use of Collective DC schemes as part of a long-term vision for pension saving in the UK.
Call for Evidence on Lifetime Provider Model and small pots consultation response – The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life, and on a potential expanded role for collective defined contribution (CDC) schemes in future. The government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000.
Public consolidator for DB pension schemes – DWP will launch a consultation this winter on options for DB schemes, currently unserved by the market, to consolidate into a new statutory vehicle run by the Pension Protection Fund.
Solvency II Reform – The government announced reforms to Solvency II, the prudential regulatory regime for insurers, at Autumn Statement 2022. The government will be introducing secondary legislation to give effect to the reforms, delivering a more tailored, clearer, and simpler regulatory regime for the insurance sector, and incentivising private investment in long-term productive assets.
Growth Fund – Following positive feedback from industry, the government is confirming its intention to establish a Growth Fund within the British Business Bank. The Growth Fund will give pension schemes access to the BBB’s pipeline of opportunities, crowding private capital into the UK’s most promising businesses.
Long-term Investment for Technology and Science (LIFTS) – Subject to final agreement, the government will commit £250 million to two successful bidders under the LIFTS initiative. This will create new investment vehicles tailored to the needs of pension schemes, seeking to generate over a billion pounds of investment to support the UK’s most promising science and technology businesses.
Pension investment expertise and skills – The government supports the Pensions Regulator’s plans to implement a register of trustees to aid engagement with trustees and to update the trustee toolkit to include further information on productive finance.
Prioritising long-term pension investment performance over low fees – Building on the guidance and commitments made by the Productive Finance Working Group, the government will engage with industry on proposals to ensure that all aspects of the pensions market are playing their part to support best outcomes for savers. This will include how to shift employer incentives away from low fees towards long-term pension investment performance. The Pensions Regulator will provide further information for employers on what factors should be assessed when they are selecting a pension scheme.
Surplus extraction arrangements for DB pension schemes – DWP will launch a consultation this winter on the appropriate regime under which surpluses can be repaid and enabling 100% PPF coverage for DB schemes that opt to pay a higher levy. The authorised surplus payments charge will be reduced from 35% to 25% from 6 April 2024.
Local Government Pension Scheme: Investment reform consultation response – Following consultation, the government confirms that Local Government Pension Scheme (LGPS) guidance will be revised to implement a 10% allocation ambition for investments in private equity, which is estimated to unlock £25bn, as well as a March 2025 deadline for the accelerated consolidation of LGPS assets into pools, and setting a direction towards fewer pools exceeding £50bn of assets under management.
Supporting the growth of the UK’s world leading financial services sector
Smarter Regulatory Framework programme – The government is pressing ahead with work to ensure the UK maintains its world-leading financial services regulatory environment. The government will deliver its commitment to make significant progress in building a Smarter Regulatory Framework, tailored to the UK, by the end of the year. This includes the upcoming laying of legislation to replace the current Prospectus, Securitisation and Data Reporting Services Regulation regimes.
Replacing the Securitisation Regulation – The government will lay a statutory instrument that will replace the retained EU law Securitisation Regulation with a new framework tailored to the UK. This takes forward certain reforms identified in the government’s 2021 Review of the Securitisation Regulation.
Replacing the Short Selling Regulation (SSR) – The government has published a draft statutory instrument setting out how it will replace the retained EU law short selling regulation, including aspects on sovereign debt, with a new framework tailored to the UK. The government will also shortly legislate to double the SSR reporting threshold, as announced at Mansion House.
Replacing the Data Reporting Services Regulation (DRSR) – The government will shortly lay a statutory instrument that will replace retained EU law in relation to Data Reporting Services Providers (DRSPs) with a new framework tailored to the UK. This delivers on the Edinburgh Reforms commitment to have a regulatory framework for a consolidated tape in place by 2024.
Investment Research Review – The government and the FCA are engaging with industry stakeholders to take forward the recommendations of the Investment Research Review. This will inform formal consultations in 2024.
UK Retail Disclosure Framework – The government has published a draft statutory instrument setting out how it will replace the retained EU law Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a new framework tailored to the UK. The accompanying policy note confirms the scope of the new framework, including its application to overseas funds, and sets out the government’s intention to fully resolve legislative issues with cost disclosure.
Prospectus reform – The government will shortly lay a statutory instrument to replace the retained EU law prospectus regime with a new framework tailored to the UK. This will create a more agile and simplified regime, helping to widen participation in the ownership of public companies, simplify the capital-raising process for companies on UK markets, and make the UK a more attractive listing destination.
Future of Payments Review – The government welcomes the publication of Joe Garner’s Future of Payments Review. The government will repeal prescriptive EU-derived payments authentication rules and will also legislate to unlock the full potential of Open Banking-enabled payments. Next year, the government will publish a National Payments Vision.
Digital Securities Sandbox – The government will publish a response to the consultation on the Digital Securities Sandbox (DSS), which will facilitate the adoption of digital assets across financial markets. The government will also lay an SI to implement the DSS, delivering on the Edinburgh Reform announcement to implement a Financial Market Infrastructure Sandbox in 2023.
Consultation on introducing a UK regime for captive insurance companies – The government will consult on the design of a new framework for encouraging the establishment and growth of captive insurance companies in the UK. The consultation will launch in Spring 2024.
Mortgage Guarantee Scheme extension – The Mortgage Guarantee Scheme supports the availability of 95% Loan-to-Value mortgage products. While the scheme was due to close to new accounts on 31 December 2023, the Government will extend the scheme for an additional 18 months until the end of June 2025 to continue helping prospective borrowers with smaller deposits buy a home.
NatWest shareholding – The government intends to fully exit its shareholding in NatWest Group by 2025-26, subject to supportive market conditions and sales representing value for money. As part of this process, the government will explore options to launch a share sale to retail investors in the next 12 months, subject to supportive market conditions and achieving value for money.
UK Asset Resolution (UKAR) Pension Schemes Transfer – Continuing progress towards winding down the UKAR interventions, the government expects the transfer of the former Northern Rock Asset Management and Bradford & Bingley pension schemes to central government to occur in 2025-26.
Corporate Governance Reform – The government has written to the Financial Reporting Council (FRC) to update its remit, emphasising the role the FRC should play in promoting growth and competitiveness. [footnote 181] The government welcomes the Capital Markets Industry Taskforce work to reset culture through an “investor covenant” and the commitment from industry to provide additional funding to the Investor Forum. [footnote 182]
Supporting our scientists and innovators
Extension to Future Fund: Breakthrough – The government will provide at least £50 million of additional funding to the Future Fund: Breakthrough investment programme, helping the UK’s most intensive R&D companies to scale up.
Venture capital fellowship scheme – The government will develop a fellowship course targeting mid-career science and technology venture capital investors, similar to the Kauffman Fellowship in the US, to be operational in 2024. This will produce the next generation of world-leading UK VC investors to support the UK’s most innovative high-growth companies.
Youth Mobility Schemes – The government is signing and expanding new and existing Youth Mobility Schemes to improve UK and overseas nationals’ opportunities to live, work, and travel in each other’s countries.
Pro-Innovation Regulation of Technologies Review: Cross Cutting and Growth Duty – The government is publishing Professor Dame Angela McLean’s final report in this series and the government response, accepting recommendations to encourage pro-innovation regulation in all sectors.
New regulatory sandboxes – The government will establish new regulatory sandboxes for spectrum sharing, engineering biology, and space to help support innovation in these areas.
Government response to independent review of spin-outs – The government has published its response to the independent review of spin-outs, and has accepted all the recommendations, which will improve the ecosystem of support for university spin-out companies. The government is also introducing a new £20 million cross-disciplinary proof-of-concept research fund, which will help prospective founders in universities demonstrate the commercial potential of their research.
Quantum Missions – The government has published a set of quantum missions that will be delivered over the next decade.
Space Clusters and Infrastructure Fund – The government is awarding up to £59 million to 15 projects, which will leverage significant additional private funding from the sector, representing an expected £100 million of new private / public investment in space research and development infrastructure.
Connectivity in Low Earth Orbit (CLEO) R&D programme – The government is opening £15 million of calls to nurture innovation for satellite communications which will be delivered as part of the £60 million European Space Agency Advanced Research in Telecommunications Systems (ARTES) programme, allocated to the UK’s CLEO scheme.
Earth observation package – The government is investing £47 million in the earth observation sector, which will enable the UK industry to make better use of Earth Observation data for climate science and to develop innovative products and services.
National Academy for mathematical sciences – The government will support the establishment of a National Academy focused on Mathematical Sciences.
R&D infrastructure investment – The government will invest £25 million in scientific infrastructure through Public Sector Research Establishments.
Business innovation support – The government will invest £145 million through Innovate UK to support business innovation. This includes £20 million for productivity and decarbonisation of foundation industries, £50 million for battery innovation, £50 million for investment in Catapults, and £25 million for innovation in critical technologies.
Discovery Fellowships – The government aims to invest £250 million in new fellowships for world-class mid-career researchers. To maximise flexibility and test new funding models, it is exploring funding this through an endowment.
Response to the Landscape Review – The government is publishing its vision for evolving the landscape of organisations performing research, development and innovation, informed by the Review of the RDI organisational landscape led by Sir Paul Nurse.
Business visitor visa reform – The government will expand the business visitor rules to allow businesspeople to engage in a wider range of permitted activities and paid engagements, to take effect from January 2024. The government will also explore further reforms to the business visitor rules, during 2024.
Payment and Cashflow Review – The government has published its Payment and Cash Flow Review Report and responses to the consultation on the Payment Practices and Performance Regulations 2017 and the statutory review of the Small Business Commissioner. These publications outline measures to combat late payments.
Government Procurement and Prompt Payment – To encourage prompt payments, the government will introduce a requirement that firms bidding for government contracts over £5 million from April 2024 will have to demonstrate they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.
Made Smarter – The government will expand the Made Smarter Adoption programme, committing up to £16 million in 2025-26 to offer the scheme to all English regions before working with the devolved administrations to explore expanding the programme from 2026-27. The programme supports manufacturing SMEs to use advanced digital technologies, and expansion will also involve inclusion of digital internships in the programme.
UK Export Finance SME Support – The government will offer additional support to SMEs to access global markets through UK Export Finance including reviewing the products available for SMEs and enhancing the SME-focused support that is offered.
Help to Grow – The government will commit to future delivery of the Help to Grow: Management programme beyond 2024-25, providing training to SME leaders.
Growth Hubs – The government will commit to funding for Growth Hubs in 2024-25, delivering local business advice and support.
Digital Adoption – The government will set up a taskforce with industry to rapidly explore how best to support SMEs to adopt digital technology to improve their productivity.
Investing in key sectors
Landfill Remediation Pathfinder – The government is launching a £78 million competitive pilot fund to alleviate the cost of landfill tax where it is acting as a barrier to the remediation and redevelopment of contaminated land.
Future Climate Change Agreement scheme – The government is introducing a new, six-year Climate Change Agreement scheme. Participants that meet agreed energy efficiency or decarbonisation targets between 2025 and 2030 will be entitled to reduced rates of Climate Change Levy from 1 July 2027 to 31 March 2033. The new scheme will be open to applications for new sectors that meet energy intensity and import penetration criteria, and will require more regular reporting of energy and throughput data.
Climate Change Levy Rates 2025-26. The government will freeze main and reduced rates of Climate Change Levy in the UK in 2025-26 at the main rate of £0.00775/kWh for electricity and gas, £0.02175/kWh for liquid petroleum gas (LPG), and £0.06064/kWh for any other taxable commodity. Reduced rates will be frozen at 92% for electricity, 77% for LPG, and 89% for gas and any other taxable commodity.
Reforms to Energy-Saving Materials VAT Relief – Following a call for evidence, the government will expand the VAT relief available on the installation of energy-saving materials by extending the relief to additional technologies – such as water-source heat pumps – and bringing buildings used solely for a relevant charitable purpose within scope. Thanks to the Windsor Framework, these reforms will be implemented UK-wide in February 2024. Full details on these reforms will be published shortly.
Crown Estate modernisation – The government will bring forward legislation to provide The Crown Estate with borrowing and wider investment powers as soon as parliamentary time allows.
Carbon price support review and 2025-26 rates – The government will maintain Carbon Price Support (CPS) rates in Great Britain at a level equivalent to £18 per tonne of carbon dioxide in 2025-26. The government will continue to engage with industry and review CPS beyond the announced rates.
Oil and Gas Fiscal Regime – The government has announced an oil and gas fiscal regime package covering the short, medium- and long-term. The government has published a Technical Note and Summary of Responses from the Energy Profits Levy (EPL) Energy Security Investment Mechanism (ESIM) discussion note. In addition to restating that the EPL will end no later than 31 March 2028, these confirm that the EPL ESIM will be monitored monthly and that the price thresholds of the mechanism will be adjusted annually in line with CPI from April 2024. The government will introduce legislation to give effect to the ESIM in due course. The government has also published its conclusions to the review of the long-term oil and gas fiscal regime. This includes setting out principles for the tax treatment of future oil and gas price shocks after the end of EPL and targeted support for the energy transition through allowing relief for payments made by oil and gas companies into decommissioning funds in relation to oil and gas assets that are repurposed for use in Carbon Capture Usage and Storage instead of being decommissioned after their productive life in upstream projects. Legislation will also remove the receipts from the sale of these assets from the EPL.
Plastic Packaging Tax – The government will legislate in the Autumn Finance Bill 2023 to increase the Plastic Packaging Tax rate in line with CPI, from 1 April 2024, to £217.85 per tonne. To ensure the Plastic Packaging Tax continues to incentivise the use of recycled plastic in packaging, the government will publish an evaluation plan by the end of the year and gather further evidence to inform the future trajectory of the rate and recycled plastic content threshold.
Aggregates Levy Rate – The government will increase the Aggregates Levy rate in line with RPI, from 1 April 2025 to £2.08 per tonne.
Emissions Trading Scheme – Reforms to the ETS, as set out by the UK ETS Authority in July 2023, will reduce the number of ETS permits available for purchase from government by 45% between 2023 and 2027. It will also extend the scheme to cover emissions from domestic maritime and energy from waste in 2026 and 2028 respectively.
Manufacturing Funding – Funding of £4.5 billion will be made available starting in 2025-26 lasting for five years for eight manufacturing sub-sectors: automotive (particularly zero emission vehicles, their batteries and supply chains), aerospace, life sciences, and clean energy (carbon capture, utilisation and storage, electricity networks, hydrogen, nuclear and offshore wind).
Pro-Innovation Regulation of Technologies Review: Advanced Manufacturing – The government is publishing Professor Dame Angela McLean’s review on pro-innovation regulation of technologies for advanced manufacturing and the government response. This is the fifth report in the series commissioned at Autumn Statement 2022. The government’s response accepts Dame Angela’s recommendations and sets out how these will be implemented.
Clinical Trials Delivery Accelerator (Dementia) – The government is launching the first Clinical Trials Delivery Accelerator (CTDA) focused on dementia, with up to £20 million of the £121 million funding announced for clinical trials at the May life sciences moment, to help innovation reach NHS patients even faster.
Oligonucleotide Manufacturing Centre of Excellence (OMICE) – The government is investing £10 million, with an additional £10 million from Scottish Enterprise, in a world-class manufacturing centre in Paisley, Scotland, to develop a novel class of therapeutic molecules to be used for the treatment of a wide variety of diseases.
Fleming Centre – The government is granting £5 million to support establishment of the Fleming Centre to tackle the global fight against antimicrobial resistance (AMR).
Our Future Health – The government is providing £51 million to the UK’s largest health research proramme to recruit hundreds of thousands of new volunteers and genotype the first 1 million participants.
Creative Industries: call for evidence on the visual effects industry – The government has published a call for evidence on recent trends in the visual effects industry. This will inform the design of additional tax relief for expenditure on visual effects, which the government intends to deliver through the Audio-Visual Expenditure Credit. The government intends to consult on the detailed policy design of further support and intends to implement changes to the expenditure credit from April 2025.
Extension of uplifted relief for animated TV to include animation film – As previously announced, animated feature film will be eligible for a 5% uplift in relief under the Audio-Visual Expenditure Credit.
High-end TV relief: amending documentary definition – The government has amended the proposed definition of a documentary. The new definition is aligned with the guidance used by the British Film Institute and will apply to the Audio-Visual Expenditure Credit, which will be legislated for in the Autumn Finance Bill 2023.
Amendment to rules for connected party transactions in creative industry tax reliefs – The proposal to cap the relief that companies can receive on connected party transactions has been amended. Companies will now be required to disclose connected party transactions and charge connected parties at an arm’s length price. This will be legislated in the Autumn Finance Bill 2023.
Creative Industries – the government will provide £2.1 million of new funding for the British Film Commission and the British Film Institute Certification Unit for 2024/25. The government will also review the evidence on public investment in R&D spending for the creative industries to a Spending Review timeframe.
Increasing investment in UK research and innovation – The Prime Minister has negotiated excellent terms for the UK to associate to Horizon Europe and Copernicus. As a result, the government is making additional substantive investment in UK R&D this financial year. This includes Green Futures Fellowships, the Isambard supercomputer, Discovery Fellowships, business innovation support, Our Future Health, R&D infrastructure investment, and support to establish a National Academy focused on Mathematical Sciences.
Lord Harrington Review of Foreign Direct Investment – The government agrees in principle with Lord Harrington’s headline recommendations and will establish a new Ministerial Investment Group, review investment grant processes, and increase resourcing for the Office for Investment, strengthening the UK’s world-class concierge service for investors.
Connected and Automated Mobility funding – The government has committed to extend the Connected and Automated Mobility R&D programme with up to £150 million of funding between 2025-26 and 2029-30, helping the UK secure first-mover advantage in the deployment of self-driving vehicles and services.
5G Innovation Regions – The government is announcing the ten regions that have been awarded funding to establish themselves as 5G Innovation Regions following a competition for the £40 million adoption fund. This will support regions to drive take up of innovative 5G-enabled services for businesses and the public sector.
AI Compute – Investing £500 million in further UK based compute so that universities, scientists and start-ups have access to the compute power they need to help make the UK an AI powerhouse.
Rare Diseases Launchpad – The government is supporting a pilot developed by a consortium including Genomics England, Oxford Harrington Rare Disease Centre, the Medicines and Healthcare products Regulatory Agency, and Mila’s Miracle Foundation to generate evidence on a pathway for new individualised therapeutics in the UK for children with ultra-rare diseases.
New devolution deals – The government has finalised four new devolution deals across England. This includes two Level 3 mayoral deals with Greater Lincolnshire, and Hull and East Yorkshire and two Level 2 non-mayoral deals with Lancashire and Cornwall. The government is also in advanced discussions to agree a Level 2 non-mayoral deal with Devon and Torbay.
Extension of Level 2 devolution deals – The Department for Levelling Up, Housing and Communities intends to offer Level 2 devolution powers to councils that cover a functional economic or whole county area, and meet relevant criteria as set out in the Levelling Up White Paper, where there is local consent to such arrangements.
Single Settlements Memorandum of Understanding – At Spring Budget 2023 the government announced two new trailblazer deals with West Midlands Combined Authority (WMCA) and Greater Manchester Combined Authority (GMCA). This included a commitment to provide flexible, single funding settlements for these MCAs at the next Spending Review. The government has published a Memorandum of Understanding (MoU) for these single settlements. The MoU sets out how the government will operationalise these single funding settlements for the GMCA and WMCA.
Business rates retention – the government has agreed the detailed terms of the long-term business rates retention arrangements for the Greater Manchester and West Midlands Combined Authorities, delivering on the commitment in the trailblazer deals announced at Spring Budget 2023. These arrangements will commence from April 2024.
Level 4 framework – The government has published a new framework for extending deeper devolution to existing Level 3 Mayoral Combined Authorities (MCAs). The Level 4 framework provides new powers for MCAs to draw down on, based on the trailblazer deals negotiated with the Greater Manchester and West Midlands Combined Authorities, including powers over adult skills, local transport and housing.
Levelling Up Partnerships (LUPs) extension to Scotland – The government, in collaboration with the Scottish Government, is announcing over £80 million of investment for the expansion of the Levelling Up Partnerships programme to Scotland, for Na h-Eileanan an lar, Argyll and Bute, Dundee, and the Scottish Borders. The government will consider, as the programme develops, how to extend it further.
Additional regeneration projects – In addition to the recently announced Levelling Up Fund Round Three projects, the government is announcing £37.5 million to support regeneration in places across the UK. These are: the Isles of Scilly, Warrington, Monmouthshire, North Norfolk and Eden. All funding is subject to final checks, including subsidy control. Bolsover will also receive £15 million, ensuring that all Priority Places, as determined using the Levelling Up Need metrics set out in the Levelling Up White Paper, have benefited from levelling up funding. The government will also support the Hay Festival in Wales, and the reallocation of £20 million from within the Inverness & Highland City Region Deal to fund essential landside infrastructure improvements for the Corran Ferry, subject to agreement through the appropriate Deal governance structures. This will ensure the long-term sustainability of the lifeline service.
Barrow Delivery Board – The government is announcing a new Delivery Board in Barrow-in-Furness, backed by £5 million of funding, to ensure local people see lasting benefits from investment in the Defence Nuclear Enterprise.
Fund Simplification Implementation – The recently announced funding simplification doctrine will come into force from January 2024. This is an important step to simplifying the local government funding landscape, giving councils greater flexibility and freeing up resources for delivery.
Local Finance Working Group – The Department for Levelling Up, Housing and Communities will work with the UK Infrastructure Bank, the British Business Bank, Homes England and other departments to consider – with local and private sector partners – how to support levelling up through improving access to finance. The group will report to Ministers by the spring.
Investment Zones Programme Extension – The Investment Zones programme in England will be extended from five to ten years. Investment Zones will be provided with a £160 million envelope from 2024-25 to 2033-34 which can be used flexibly between spending and tax incentives, subject to ongoing co-design of proposals and agreement of delivery plans. The UK government will work in partnership with the Scottish and Welsh governments with the intention of delivering an extension to the Investment Zones programme in Scotland and Wales and continue to work with stakeholders on how best to deliver the benefits of the Investment Zones programme in Northern Ireland.
Announcing Investment Zones – Greater Manchester’s Investment Zone will focus on advanced manufacturing and materials across Manchester, Salford, Rochdale, Bury, Oldham and the wider city region, with anchor investment from First Graphene, Kadant, Werit and Hydrograph worth over £10 million. West Midlands’ Investment Zone will focus on advanced manufacturing across Birmingham, Wolverhampton and Coventry, with benefits felt across the wider region, with anchor investment from Bruntwood SciTech and Woodbourne Group worth £70 million in total and backed by over £5 million of investment into enabling digital platforms to support advanced manufacturing growth. East Midlands’ Investment Zone will focus on advanced manufacturing and green industries across Nottinghamshire, Derby and Derbyshire with benefits felt across the wider region, with anchor investment from Rolls Royce and Laing O’Rourke worth £9.3 million. In addition to this, the government can confirm there will be two Investment Zones in Wales; one located across Cardiff and Newport, delivered by the South East Wales Corporate Joint Committee and another focusing on Wrexham and Flintshire delivered by the North Wales Corporate Joint Committee. The government will be working closely with the Welsh Government on the delivery of these Investment Zones.
Investment Opportunity Fund – The government is creating a £150 million fund to support Investment Zones and Freeports across the UK to secure business investment opportunities. The fund will be available over five years.
Freeport Tax Relief Sunset Date Extension – The window to claim Freeport tax reliefs will be extended from five to ten years, until September 2031 in English Freeports, conditional on agreement of delivery plans with each Freeport. The UK Government will work with the devolved administrations to agree how the 10-year window to claim reliefs can be extended to Freeports in Scotland and Wales.
Freeports Delivery Roadmap – The Department for Levelling Up, Housing and Communities will publish a Freeports Delivery Roadmap in December outlining the steps the government will take to ensure Freeports are best able to capitalise on the opportunity the extension presents.
Tackling Paramilitarism Programme – The government is confirming the allocation of £3 million for the Tackling Paramilitarism Programme in Northern Ireland, enabling the programme to continue its positive work to tackle paramilitarism in Northern Ireland and strengthen community resilience.
Cambridge, Leeds and London – The government is announcing a further £2 million to address water scarcity in Cambridge, alongside £3 million to support the Cambridge Delivery Group drive the long-term vision for Cambridge by exploring the case for a development corporation. An additional £2 million in capacity funding will also be available for Leeds City Council to maximise delivery of new homes. Subject to business case approval, the government will also provide £23 million for a bus network to unlock housing in the ‘Docklands 2.0’ as part of the £150 million allocation to London from the Brownfield, Infrastructure and Land Fund.
Planning capacity funding – The government is investing £5 million in additional funding for DLUHC’s Planning Skills Delivery Fund for Local Planning Authorities to target application backlogs.
Local Nutrient Mitigation Fund – The government is providing £110 million of funding to support Local Planning Authorities to deliver high quality schemes to offset nutrient pollution, unlocking planning permissions that are otherwise stalled.
Affordable Homes Guarantee Scheme – The government is expanding the existing £3 billion scheme by a further £3 billion to support housing associations to access cheaper loans for quality and energy efficiency works as well as new homes.
Housing Revenue Account rate extension – The government is announcing a £5 million extension to June 2025 of the Public Works Loan Board policy margin announced in Spring 2023. This supports local authorities borrowing for Housing Revenue Accounts, and could provide savings and additional investment in social housing of as much as £150 million over the life of the borrowing.
Home buying and selling – The government is providing £3 million for a range of measures to improve the home buying and selling process, including pilots to develop property tech products and to digitise local council property data.
Local Authority Housing Fund 3 – The government is announcing £450 million for a third round of the Local Authority Housing Fund to deliver 2,400 new housing units to house Afghan refugees and ease wider housing and homelessness pressures. This will bring the total amount spent on the Local Authority Housing Fund to over £1.2 billion.
Homes for Ukraine and homelessness prevention – The government will extend ‘thank you’ payments into a third year for Homes for Ukraine sponsors across the UK. They will remain at £500 per month and reflect the ongoing generosity of hosts in supporting those who have fled the war. The government is also providing £120 million funding for the devolved administrations and local authorities in England to invest in homelessness prevention, including to support Ukrainian households who can no longer remain in sponsorship.
Permitted Development Right convert one house into two flats – The government is announcing a consultation on a new Permitted Development Right for subdividing houses into two flats without changing the façade. This will be implemented in 2024 following consultation early in the New Year.
This annex sets out the revision to the government’s financing plans for 2023-24, which were previously revised on 25 April 2023. [footnote 183] Further details of the revised financing remit for 2023-24, including progress against the remit to date, can be found on the website of the UK Debt Management Office (DMO). [footnote 184] The government’s debt management framework remains as set out in the ‘Debt management report 2023-24’. [footnote 185]
Debt management objective
The debt management objective, as set out in the ‘Debt management report 2023-24’, is “to minimise, over the long term, the costs of meeting the government’s financing needs, taking into account risk, while ensuring that debt management policy is consistent with the aims of monetary policy.”
Debt management policy
While decisions on debt management policy must be taken with a long-term perspective, specific decisions on funding the government’s gross financing requirement are taken annually. Those decisions are announced in advance of the forthcoming financial year and are typically updated in April (a technical adjustment to reflect outturn data from the previous year) and as the Office for Budget Responsibility (OBR) publishes subsequent fiscal projections.
The updated financing arithmetic for 2023-24 is set out in Table A.1.
The OBR’s November 2023 forecast for the 2023-24 central government net cash requirement (excluding NRAM ltd, Bradford & Bingley, and Network Rail), which is referred to as CGNCR (ex NRAM, B&B, and NR) is £150.5 billion, which represents a downward revision of £9.0 billion from Spring Budget 2023. This measure is used in the financing arithmetic, as it reflects the forecast cash requirement of the Exchequer.
The DMO’s net financing requirement (NFR) was revised down by £3.3 billion on 25 April 2023 from £246.1 billion at Spring Budget 2023. The DMO’s NFR is being revised down by a further £10.5 billion at the Autumn Statement. The updated forecast for the NFR comprises: CGNCR (ex NRAM, B&B, and NR), plus financing for maturing debt, and a reconciling adjustment due to unanticipated over financing in 2022-23; less the net contribution to financing from National Savings and Investments (NS&I) and any other ad hoc in-year contributions to financing. The downward revision to the DMO’s NFR will be delivered through: a reduction in gross gilt issuance this year of £0.5 billion; and a £10.0 billion reduction in the financing raised through Treasury bill issuance for debt management purposes.
Table A.1: Financing arithmetic in 2023-24 (£ billion)(1)
Gilt issuance by method, type and maturity.
The method, type and maturity of gilt issuance were previously set out in April 2023. Total gilt sales in 2023-24 are now forecast to reduce by £0.5 billion to £237.3 billion.
The decrease in gilt sales of £0.5 billion will be implemented as follows:
- An increase of £2.0 billion in short-dated conventional gilts to £86.6 billion (36.5% of total issuance in 2023-24)
- An increase of £3.0 billion in medium-dated conventional gilts to £68.3 billion (28.8% of total issuance in 2023-24)
- An increase of £1.6 billion in long-dated conventional gilts to £51.3 billion (21.6% of total issuance in 2023-24)
- An increase of £2.4 billion in index-linked gilts to £28.6 billion (12.1% of total issuance in 2023-24)
- A reduction of £9.5 billion in the unallocated portion to £2.5 billion. Since April 2023, the unallocated portion has been drawn-down via transfers to the medium and long conventional and index-linked gilt sales programmes.
Auctions will remain the government’s primary method of gilt issuance. It is anticipated that £203.1 billion (85.6%) of total gilt sales will be sold by auction in 2023-24, and £31.4 billion (13.2%) will be issued by syndication.
Green gilts and green retail savings product
Since Spring Budget 2023, the government has made strong progress with its green financing programme, under which the UK issues sovereign green bonds (‘green gilts’) via the DMO, and retail Green Savings Bonds via NS&I. The government aims to raise £10.0 billion via green gilts this financial year.
The UK successfully launched its inaugural green gilt maturing in 2033 on 21 September 2021, followed by a second green gilt, maturing in 2053 on 21 October 2021, bringing total proceeds raised by both issues to £16.1 billion. In FY 2022-23, a further £9.9 billion was raised by reopening the existing green gilts.
The retail Green Savings Bonds were brought on sale via the NS&I website on 22 October 2021. The retail Green Savings Bonds are a 3-year fixed-term product, with the current sixth issue of the product offering an interest rate of 3.95%. Customers can invest between £100 and £100,000. A world-first sovereign retail green investment product, this innovative financing instrument will allow UK savers to support the government’s green spending initiatives.
Treasury bills for debt management purposes comprised £70.0 billion of the total debt stock at the end of 2022-23. It was anticipated at Spring Budget 2023 that net issuance of Treasury bills for debt management purposes in 2023-24 would contribute £5.0 billion to meeting the NFR. It is now planned for net issuance to make a contribution of -£5.0 billion.
NS&I’s net financing target in 2023-24 remains at £7.5 billion, within a range of ± £3.0 billion, as set out at Spring Budget 2023. This target reflects NS&I’s requirement to balance the interests of its savers, the taxpayer, and the wider financial services sector. The proceeds from the sale of the retail Green Savings Bonds do not form part of the annual net financing target. They will be reported as part of the financing arithmetic before the financial year-end.
Illustrative future gross financing requirement
Table A.2 sets out the illustrative gross financing requirement for each financial year from 2024-25 to 2028-29, using the OBR’s November 2023 forecast for CGNCR (ex NRAM, B&B, and NR) and taking into account current planned gilt redemptions.
Table A.2: Illustrative gross financing requirement (£ billion)(1)
‘Economic and Fiscal Outlook’ , Office for Budget Responsibility, November 2023. ↩
‘Consumer price inflation, UK’ , Office for National Statistics, October 2023. Details of numerical references, including National Statistics, used in this chapter can be found in ‘Autumn Statement 2023 data sources’. ↩
‘Spring Budget’ , HM Treasury, March 2023. ↩
‘Forecast Evaluation Report’ , Office for Budget Responsibility, October 2023. ↩
‘Report on Jobs’ , KPMG and REC, November 2023. ↩
‘Using administrative data to create headline labour market figures’ , Office for National Statistics, November 2023. ↩
‘Labour force survey: planned improvements and its reintroduction’ , Office for National Statistics, November 2023. ↩
‘Monetary Policy Report’ , Bank of England, November 2023. ↩
‘Key ECB interest rates’ , European Central Bank, September 2023. ↩
‘Open market operations’ , Federal Reserve Board, July 2023. ↩
‘Fiscal Monitor’ , International Monetary Fund, October 2023. Data uses general government metrics and, unlike the OBR, makes specific judgements of the likelihood of future tax and spend policy, meaning figures differ. Data from the IMF are taken on a calendar year whereas the OBR’s forecasts are presented on a financial year basis. ↩
‘Fiscal Monitor’ , International Monetary Fund, October 2023. ↩
‘France, 2022 Article IV Consultation’ , International Monetary Fund, January 2023. ↩
‘Germany’s federal debt rule’ , Federal Ministry of Finance, February 2022. ↩
‘Stability and Growth Pact’ , European Commission, October 2021. ↩
‘2023 Budget’ , Government of Canada, March 2023. ↩
‘Fiscal overview’, Parliament of Australia, April 2022. ↩
‘Government Response to the 2023 Fiscal Risks and Sustainability Report’ , HM Treasury, November 2023. ↩
‘Annual Report on the UK Government’s Contingent Liabilities’ , HM Treasury, November 2023. ↩
‘Economic and Fiscal Outlook’ , Office for Budget Responsibility, October 2022. ↩
‘The Charter for Budget Responsibility’ , HM Treasury, January 2023. ↩
‘Public Sector Finances’ , Office for National Statistics, October 2023. ↩
‘Economic and Fiscal Outlook’ , Office for Budget Responsibility, March 2023. ↩
‘A long unwinding road, OECD economic outlook’ , Organisation for Economic Co-operation and Development, June 2023. ↩
‘Quasi Fiscal Implications of Central Bank Crisis Intervention’ , International Monetary Fund, June 2023. ↩
Changes to the core schools budget since Autumn Budget and Spending Review 2021 as a result of uplifts announced at Autumn Statement 2022 and alongside the July 2023 teacher pay award . ↩
Record funding for schools in England , Department for Education, July 2023. ↩
Spring Budget 2023 , HM Treasury, March 2023. ↩
PM announces further £1 billion in military support to Ukraine , Prime Minister’s Office, 10 Downing Street, Ministry of Defence, June 2022; UK will match record Ukraine support in 2023 , Prime Minister’s Office, 10 Downing Street, September 2022. ↩
Global businesses pledge to back Ukraine’s recovery as PM sets out major financial package , Prime Minister’s Office, 10 Downing Steet, Foreign, Commonwealth & Development Office, June 2023. ↩
HMT calculations based on Autumn Statement 2023 HMT DEL plans and OBR Economic and Fiscal Outlook - November 2023. ↩
Autumn Budget and Spending Review 2021 , HM Treasury, October 2021, page 49. ↩
Government Efficiency Savings 2021/22 , Cabinet Office, July 2023. ↩
Cabinet Office calculations based on progress of property sales programme so far. ↩
Speech: Skills, Efficiency and Technology in the Civil Service, Cabinet Office , July 2023. ↩
GOV.UK One Login: 1.5 million people already benefiting from reform of government services online , Cabinet Office, Government Digital Service, July 2023. ↩
Speech: Skills, Efficiency and Technology in the Civil Service , Cabinet Office, July 2023. ↩
New counter fraud authority saves taxpayers £311 million in its first year, beating target by more than £100 million , Cabinet Office, Public Sector Fraud Authority, September 2023. ↩
The Government Efficiency Framework , HM Treasury, July 2023. ↩
Annual Reports and Accounts 2021-22 , Department of Health and Social Care, January 2023. ↩
Government and health unions agree pay deal paving way for an end to strike action , Department of Health and Social Care, March 2023. ↩
Prime Minister to create ‘smokefree generation’ by ending cigarette sales to those born on or after 1 January 2009 , Prime Minister’s Office, 10 Downing Street, October 2023. ↩
NHS Long Term Workforce Plan , NHS England, June 2023. ↩
Public Service Pensions: SCAPE discount rate , HM Treasury, March 2023. ↩
Occupied Palestinian Territories: Humanitarian Situation , Hansard, November 2023. ↩
Extra £20 million in humanitarian aid doubles UK support to Palestinian civilians , Foreign, Commonwealth & Development Office, Prime Minister’s Office, 10 Downing Street, October 2023. ↩
As set out in the Written Ministerial Statement on 27 April on Northern Ireland Finances 2023-24, Barnett consequentials for 2023-24 will be used to repay the £297 million Northern Ireland Executive overspend from 2022-23. Details will be confirmed at Supplementary Estimates 2023-24. ↩
Policing Productivity Review , Home Office, November 2023. ↩
According to the latest ONS official statistics on public sector employment in the UK , there were 457k FTE in June 2023, compared to 391k in March 2019, excluding devolved administrations. If the size of the civil service remained at June 2023 levels, instead of increasing at the average 2016-2023 growth rate, up to £1bn could be saved by March 2025. ↩
Shared Outcomes Fund Round Three , HM Treasury, November 2023. ↩
Public service productivity, UK: 1997 to 2022 , ONS, November 2023. ↩
HMT analysis of fiscal event documentation since 2016. ↩
Tax Structure and Parameters statistics, HM Revenue and Customs, June 2022. HMRC analysis of NICs liabilities. Economic and Fiscal Outlook, Office for Budget Responsibility, November 2023. ↩
Annual Survey of Hours and Earnings, Office for National Statistics, November 2023. HM Revenue and Customs analysis of NICs liabilities. ↩
HM Revenue and Customs analysis of NICs liabilities. ↩
Tax Structure and Parameters statistics, HM Revenue and Customs, June 2022. ↩
Annual Survey of Hours and Earnings, Office for National Statistics, November 2023. ↩
School workforce in England survey, June 2023. ↩
NHS Staff Earnings Estimates, NHS, June 2023. ↩
HM Revenue and Customs analysis of NICs liabilities. Annual Survey of Hours and Earnings, Office for National Statistics, November 2023. ↩
Organisation for Economic Cooperation and Development (OECD), April 2023. ↩
Policy Measures Database, Office for Budget Responsibility, October 2023. ↩
This is based on the assumption that a full-time worker on the NLW works 35 hours a week, 52 weeks a year. ↩
Department for Business and Trade calculations – for further details see Data Sources. ↩
Short-Term Labour Market Statistics: Employment Rates (Database) , OECD, 2023. ↩
Short-Term Labour Market Statistics: Inactivity Rates (Database) , OECD, 2023. ↩
Rising ill-health and economic inactivity because of long-term sickness, UK – Office for National Statistics (ons.gov.uk) , Office for National Statistics, 2023. ↩
Fiscal Sustainability and Risks Report , Office for Budget Responsibility, 2023. ↩
UK Labour Market: November 2023, Office for National Statistics, 2023 . ↩
Department for Work and Pensions, UC Health Caseload and Employment and Support Allowance Support Group Caseload, Stat X-plore , May 2019 and February 2023. ↩
Economic and Fiscal Outlook – March 2023 , Office for Budget Responsibility, 2023. ↩
UK Labour Market: November 2023 ,Office for National Statistics, 2023 ↩
Unemployment by duration , OECD, 2022. ↩
Which groups find it hardest to find a job following a period out of work? , Office for National Statistics, 2021. ↩
Written statements – Written questions, answers and statements – UK Parliament , UK Parliament, February 2023. ↩
Written statements – Written questions, answers and statements – UK Parliament , UK Parliament, September 2023. ↩
Represents gross AME savings only. See scorecard for net savings figure. ↩
Rising ill-health and economic inactivity because of long-term sickness, UK: 2019 to 2023 , Office for National Statistics, 2023. ↩
Internal NHSE calculations using existing administrative data from the NHS Talking Therapies programme. ↩
Work capability assessment activities and descriptors , Department for Work and Pensions, 2023. ↩
The Stat-Xplore caseload is 2.46 million at May 2023, the forecast combined caseload is lower than this due to the removal of dual claims where individuals claim New Style ESA (alongside UC health or legacy ESA). ↩
Economic and Fiscal outlook – November 2023, Office for Budget Responsibility, 22 November 2023 ↩
The employment of disabled people 2023 – GOV.UK (www.gov.uk) , Department for Work and Pensions, 2023. ↩
Occupational Health: Working Better , Department for Work and Pensions, November 2023. ↩
‘National fiscal policy responses to the energy crisis’ , Bruegel, 2023. ↩
Written statements – Written questions, answers and statements – UK Parliament, UK Parliament , 2023. ↩
Mortgage Charter – GOV.UK (www.gov.uk), September 2023. ↩
Inflation and price indices: November 2023, (ons.gov.uk), Office for National Statistics, November 2023 . ↩
Economic and Fiscal Outlook, Office for Budget Responsibility, November 2023. ↩
Monetary Policy Report – November 2023 , Bank of England, November 2023. Family Spending in the UK: April 2021 to March 2022 , Office for National Statistics, May 2023. ↩
Cost of Living Payments: Overview and FAQs , House of Commons Library, October 2023. ↩
Department for Work and Pensions analysis (Ad hoc statistical analyses 2023) , Department for Work and Pensions, November 2023. ↩
Average weekly earnings in Great Britain: November 2023 (ons.gov.uk), Office for National Statistics, November 2023. ↩
The new full State Pension will increase from £203.85 per week in 2023-24 to £221.20 per week in 2024-25. This is an increase of £17.35 per week, or £902.20 a year, if a pensioner receives 52 weeks of State Pension. ↩
Support figure includes raising the Local Housing Allowance, the Energy Price Guarantee, working age benefits uprating in April 2024 and April 2025, and further direct household support announced over Autumn Statement 2023, Spring Budget 2023, Autumn Statement 2022, May 2022 Package, Spring Statement 2022 and Autumn Budget 2021. Average support is calculated by dividing total support by the number of UK households (Office for National Statistics, May 2023). ↩
HM Treasury calculations using quarterly national accounts data, Eikon Refinitiv, accessed 15 November 2023. ↩
GDP Revision Triangles , real GDP Revisions, Office for National Statistics (ONS), September 2023. ↩
CPI Inflation Time Series , CPI Inflation Annual rate, ONS, November 2023. ↩
Economic and fiscal outlook , Office for Budget Responsibility, November 2023. ↩
Annual national accounts, non-financial accounts by economic sector , average of 2012-2021, OECD Statistics, 2023. ↩
HM Treasury analysis using GDP per hour worked data , OECD, 2023; Penn World Table v10.01 data on capital stocks, Human Capital index, and share of labour composition in GDP, January 2023. ↩
Growth in gross fixed capital formation from Q1 2021 – Q2 2023 for G7 countries , OECD Investment (GFCF), 2023. ↩
Economic and fiscal outlook , Office for Budget Responsibility, November 2023. The OBR account for the supply side impact of selected policy measures within their economic forecast where credible evidence suggests they are likely to have a material, additional and durable impact on potential output, as discussed in Dynamic scoring of policy measures in OBR forecasts , Office for Budget Responsibility, November 2023. ↩
Patient Capital Review, Industry Panel Response , HM Government, October 2017; Supporting Innovative Start-Up and Growing Businesses: Equity Finance Provision through the Pandemic: Interim Report , Marek Kacer, Nick Wilson, September 2023; Business equity finance and the UK regions , Department for Business and Trade (DBT), July 2019. ↩
Report on potential economic impacts of changes to the insurance regulatory framework in response to HM Treasury’s review of Solvency II and PRA Solvency II Reform Consultation Paper , KPMG, November 2023. ↩
This estimate is based on internal government analysis that draws on public and proprietary information at a sectoral level, as provided by DBT, DESNZ, and the Office for Life Sciences. The approach takes the public spending amount by manufacturing sector, uses a ratio of gross private investment per pound of public spending and applies an additionality assumption to account for the fact that some of this investment would occur without government intervention. ↩
Connections Action Plan , Department for Energy Security and Net Zero (DESNZ) and Ofgem, November 2023; Transmission Acceleration Action Plan , DESNZ, November 2023. A letter from the Energy Systems Catapult will be published on their website. ↩
2024 Price Review: key facts and data from water company draft plans , Ofwat, October 2023. Estimated expenditure is set to increase from £11.8bn per year on average (£59bn, 2020-21 to 2024-25) to £19.2bn per year on average (£96bn, 2025-26 to 2029-30). This is c£7bn per year but will include expenditure other than business investment so we have assumed £6bn. These draft company plans and costs are subject to ongoing scrutiny by Ofwat. ↩
See Box 2.2 Economic and fiscal outlook, Office for Budget Responsibility, March 2023 and Box 2.1 Economic and fiscal outlook, Office for Budget Responsibility, November 2023. The OBR estimate 110,000 additional people into employment from measures announced at Spring Budget 2023, and an additional 78,000 people into employment from measures announced in Autumn Statement 2023. ↩
Appendices to Working Paper No. 471 The Bank of England’s forecasting platform: COMPASS, MAPS, EASE and the suite of model , page 64, Bank of England, May 2013. ↩
On the basis of OECD 2023 figures taking into account national as well as sub-national rates. ↩
OECD R&D Tax Incentives database , OECD, April 2023. ↩
Policy Costings , Autumn Statement 2023. ↩
Economic and fiscal outlook , Office for Budget Responsibility, November 2023. This is based on an established evidence base on the links between cost of capital (which includes capital allowances) and business investment. ↩
Estimates based on internal HM Treasury modelling on total bill changes by sector and property type, including the effect of reliefs. ↩
Small Business Rates Relief data, National Non-Domestic Relief (NNDR) return , Department for Levelling Up, Housing and Communities (DLUHC), 2023. ↩
Business rates estimates based on DLUHC modelling using VOA data and National Non-Domestic Relief (NNDR) returns. Information on total rateable value by sector can be found from the Valuation Office Agency . HM Treasury analysis of potential benefit of full expensing to retail sector (SIC code G) using HM Revenue & Customs (HMRC) data on qualifying expenditure for capital allowances in Corporation Tax returns with accounting periods ending in 2021-22 by sector. ↩
Based on analysis of HMRC tax administration data. ↩
Delivering net zero, climate resilience and growth: Improving nationally significant infrastructure planning , National Infrastructure Commission, April 2023. ↩
Nationally Significant Infrastructure: action plan for reforms to the planning process , DLUHC, February 2023. ↩
Getting Great Britain building again: speeding up infrastructure delivery , DLUHC, November 2023. ↩
Connections Action Plan , DESNZ and Ofgem, November 2023. ↩
Transmission Acceleration Action Plan , DESNZ, November 2023. ↩
The Second National Infrastructure Assessment, National Infrastructure Commission , October 2023. ↩
Smarter regulation: strengthening the economic regulation of the energy, water and telecoms sectors , DBT, November 2023. ↩
Smarter regulation: regulating for growth , DBT, November 2023. ↩
Financial Reporting Council Remit , letter from Secretary of State for Business, November 2023. ↩
Network North: Transforming British Transport , Department for Transport (DfT), October 2023. ↩
Chancellor’s Mansion House speech , July 2023. ↩
Evolving the regulatory approach to Master Trusts, Department for Work and Pensions (DWP), November 2023. ↩
Trends in the defined contribution trust-based pensions market, DWP, November 2023. ↩
HM Treasury calculations using modelling provided by the Government Actuary’s Department on the size of the LGPS, which is estimated to grow to around £500 billion of assets by 2030. ↩
Investment Delivery Forum , July 2023. ↩
Harrington Review of Foreign Direct Investment , HMT and DBT, November 2023. ↩
HM Government’s response to Lord Harrington’s Review into the government’s approach to attracting foreign direct investment , HM Government, November 2023. ↩
Enabling growth across the UK 2023: UK-based financial and related professional services , TheCityUK, 2023; State of the sector: annual review of UK financial services 2023 , The Global City, HM Treasury, 2023. ↩
UK Listings Review , HM Treasury, November 2020; UK Secondary Capital Raising Review , HM Treasury, 2021; UK Investment Research Review, Rachel Kent, July 2023; Wholesale Markets Review Consultation Response , HM Treasury, March 2022. ↩
Building a Smarter Financial Regulatory Framework for the UK, HM Treasury’s Plan for Delivery , HM Treasury, July 2023. ↩
Future of Payments Review 2023 , HM Treasury, July 2023. ↩
R&D tax expenditure and direct government funding of BERD , OECD Statistics, 2023. ↩
Research, development and innovation (RDI) organisational landscape: an independent review , November 2023 ↩
Intellectual property, start-ups and spin-offs , HESA, April 2023. ↩
Independent Review of University Spin-out Companies and HM Government response , November 2023. ↩
National Quantum Strategy Long-Term Quantum Missions , Department for Science, Innovation and Technology (DSIT), November 2023. ↩
Immigration Rules Appendix Youth Mobility Scheme: eligible nationals , Home Office, November 2023. ↩
Business population estimates for the UK and regions 2023 statistical release , DBT, October 2023. ↩
For example, Global Startup Ecosystem Index , Startup Blink, 2023 ↩
Powering Up Britain , DESNZ, 2023. ↩
DESNZ analysis of the BloombergNEF, Energy transition investment dataset converting to 2022 prices, BNEF . ↩
PRIMAP-hist. Historical emissions time series , United Nations Climate Change (UNCC), 2022. ↩
Floating Offshore Wind in Wales , House of Commons Welsh Affairs Committee, 2023. ↩
Business Enterprise Research & Development (BERD), UK: 2021 , ONS, November 2022. ↩
Trade in goods: CPA (08) exports and imports , ONS, November 2023; Total Trade (TT): WW: Exports: BOP: CP: SA , ONS, November 2023. ↩
JOBS02: Workforce jobs by industry , ONS, 2023. ↩
JOBS05: Workforce jobs by region and industry , ONS, 2023; Regional gross disposable household income , UK, ONS, 2023. ↩
Make UK – UK Manufacturing The Facts 2023 , Make UK, 2023. ↩
Professor Dame Angela McLean’s review on pro-innovation regulation for advanced manufacturing and the government response , HM Treasury, November 2023. ↩
Critical Minerals Refresh: Delivering Resilience in a Changing Global Environment , DBT, March 2023. ↩
Internal DESNZ research; Low carbon and renewable energy economy estimates , ONS, 2023; UK trade: goods and services publication tables , ONS, November 2023. ↩
CO2 Storage Evaluation Database (CO2 Stored). The UK’s online storage atlas , Bentham et al., 2014. ↩
DCMS Sectors Economic Estimates: Monthly GVA (to September 2023) , DCMS, November 2023. ↩
UK tech sector retains #1 spot in Europe and #3 in world as sector resilience brings continued growth , DCMS, December 2022. ↩
AI investment forecast to approach $200 billion globally by 2025 , Goldman Sachs, August 2023. ↩
UK unveils world-leading approach to innovation in first artificial intelligence white paper to turbocharge growth , DSIT, March 2023; DCMS and Digital Economic Estimates: Monthly GVA (to Sept 2023) , DCMS, DSIT, November 2023. ↩
A pro-innovation approach to AI regulation , DSIT, Office for AI, March 2023. ↩
Activity in the NHS , The King’s Fund, June 2023. ↩
DCMS Economic Estimates 2019: GVA in individual DCMS sectors , DCMS, February 2021. ↩
DCMS and Digital Economic Estimates: Monthly GVA (to Sept 2023) , DCMS, DSIT, November 2023. ↩
HMRC Creative Industry statistics commentary : Creative industries tax reliefs, 2019-20 to 2021-22, HMRC, August 2023. ↩
Skills and UK Productivity , Department for Education, 2023. ↩
Apprenticeships and Traineeships , Department for Education, October 2023. ↩
DLUHC internal estimates. ↩
Financial Reporting Council Remit, Letter from Secretary of State for Business, November 2023 https://www.gov.uk/government/publications/financial-reporting-council-frc-remit-letter-from-business-secretary-november-2023 ↩
Capital Markets Industry Taskforce, Letter on Governance and Stewardship, November 2023 https://capitalmarketsindustrytaskforce.com ↩
‘Revision to the DMO’s Financing Remit 2023-24’ , UK Debt Management Office, April 2023. ↩
‘Debt management report 2023-24’ , HM Treasury, March 2023. ↩
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8 Best Cheap Small Business Phone Services (2023)
If you’re short on time, my favorite overall picks are Nextiva and Grasshopper . Both services provide the core features you’d expect—at prices that are reasonable for small businesses.
Are you looking for an affordable small business phone service?
In this post, you’ll discover a summary of 8 of the top-rated VoIP phone services for business that we’ve tested.
You’ll learn how much they cost, what features they include, what makes them great, and what makes them not so great. Let’s dive in.
Best Overall Option: Nextiva
Nextiva is a giant in the VoIP industry.
If you’ve heard of it, you’re probably not surprised to see it making our top slot. Nextiva offers a high-end VoIP experience with a robust and reliable network, some great features, and a very affordable price to boot.
Nextiva was rated the #1 business phone service provider in 2022 by US News and World Report, and 94% of Nextiva customers said they were satisfied with their experience. Customer satisfaction rates like that are almost unheard of!
When looking through Nextiva’s options, you get the feeling that the company has thought of everything. Plans come with desktop and conference room phones, making it one of the few VoIP services that include hardware. We use Nextiva ourselves at Single Grain, and the whole system works seamlessly.
Plus, Nextiva has a whole suite of video conference tools, making it a fantastic all-around communication package.
Expert Review : In our testing, Nextiva is the best overall small business phone service when taking into consideration pricing, features, and ease-of-use. Try Nextiva for free today.
Best Freelancer and Solopreneur Option: Grasshopper
Not every business needs a desktop phone and dozens of extensions. Freelancers and solopreneurs sometimes need a business phone service just like any other company does, even if their needs are slightly different.
Grasshopper caters precisely to this demographic. Unlike many of the other services on this list, this company doesn’t focus on desktop phones. Instead, it provides a mobile app that makes it easier to run your business from your smartphone which, for many solopreneurs, also happens to be your personal phone.
For example, if you miss a call, you can have Grasshopper send an automatic text to follow up so that you don’t lose the client to someone else. Or, if you find yourself getting caught off guard picking up business calls when you’re in personal mode, you can ask Grasshopper to alert you when a call is business-related so you can move to a quiet area and prepare yourself to make a great impression.
Unfortunately, Grasshopper is a bit on the pricey side, especially considering that it doesn’t come with any hardware. Still, if you’re a solopreneur or freelancer, this is one business phone system that’s definitely worth looking into.
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8 Best Business Phone Services
Before we go any further, here’s a quick overview of our full list:
1 ) Nextiva
Out of all the providers we’ve looked at, Nextiva provides one of the most robust and reliable networks around and is a leader in the VoIP business phone space: They have connected over 1 billion calls , were rated the #1 business phone service in 2023 by US News and World Report , 94% of the businesses that have used Nextiva said they are satisfied with their service, and 90% of their customers say they’d recommend it to others.
So what makes Nextiva such a popular service? It offers enterprise business phone service at a very affordable price. Plus, it has great features, comes with the hardware you need, and has a very reliable network.
When you sign up with Nextiva, you’ll get:
- Desk phones
- Conference room phones
- Apps to manage your phone, text and email communications
- A mobile app
- CRM integrations like Salesforce and HubSpot
Nextiva offers three plans, the price of which depends on the number of users and the features provided. Here are the plans and some of their features:
- Starts at $21.95/user/month (discounts available for annual subscriptions)
- Unlimited calling within the U.S. and Canada
- 1,000 toll-free minutes
- Unlimited audio conferencing for up to 4 participants
- Google and Outlook integrations
- Starts at $24.95/user/month (discounts available for annual subscriptions)
- Unlimited business SMS
- 2,500 toll-free minutes
- Unlimited audio conference calls for up to 40 participants
- Unlimited video conferencing
- Team messaging
- Call recording
- Starts at $31.95/user/month (discounts available for annual subscriptions)
- 10,000 toll-free minutes
- Unlimited audio conference calls with unlimited participants
- Audio and video screen sharing
- Zendesk, HubSpot, Salesforce, and ServiceNow integrations
- Voicemail transcriptions
Each of these plans builds on the last, so if something is in the Essential plan, it will also be included in the Professional.
Learn more about Nextiva right here.
RingCentral is no small fry in the VoIP space. Touting over 2 million users , it’s clear that the company is doing something right.
While there’s a lot to like about RingCentral, one of its best points is that it has quite a few different plans available. Simply put, that means that users have options and won’t be pigeonholed into having to decide between plans that have either far too much or far too little. Plus, plans can be customized to include additional features like vanity business phone numbers and international toll-free calling à la carte .
RingCentral offers four different plans, each building on the former:
- Starts at $19.99/user/month
- Maximum of 20 users
- Provides 100 toll-free minutes/month
- Unlimited domestic calls (U.S. and Canada)
- Starts at $24.99/user/month
- No users maximum
- Provides 1,000 toll-free minutes/month
- Unlimited audio and video meetings (maximum of 4 video participants)
- Unlimited internet fax
- On-demand call recording
- Starts at $34.99/user/month
- No user maximum
- Provides 2,500 toll-free minutes/month
- Video conference participant limit increased to 100
- Integrates with Salesforce and ZenDesk
- Automatic call recording
- Starts at $49.99/user/month
- Provides 10,000 toll-free minutes/month
- Video conference participant limit increase to 200
And no matter which plan you choose, you’ll have access to some features like:
- Unlimited SMS
- iOS and Android apps
- 24/7 customer support
- Call log reports
For most users, the deciding factors will be the number of toll-free minutes you get each month and how many people you can have on video calls at the same time. If you’re planning to use your VoIP very rarely, the Essentials plan should serve you well. But if you’re looking to use RingCentral for enterprise applications, you’ll need to go with one of the higher plans.
Overall, RingCentral provides a reliable VoIP service that can be tailored to each business’s needs.
If you watched TV at all during the early 2000s, then Vonage may stir up some feelings of nostalgia for you. Back then, they were perhaps the best-known internet phone provider, thanks to its quirky commercials .
But although the company was focused on residential VoIP phone systems in its heyday, they have since pivoted to concentrate on the more lucrative business phone market. Vonage offers several products for businesses: communications APIs, unified communications , and solutions for contact centers .
Vonage has three different plans, each of which has different prices depending on the number of lines you choose:
- Only allows calls to and from mobile devices and laptops or desktop computers
- Designed for remote team members and businesses that don’t require desk phones
- 1-4 lines: $19.99/month/line
- 5-19 lines: $17.99/month/line
- 20+ lines: $14.99/month/line
- Allows calls from all types of devices, including traditional phones
- Designed for businesses with traditional office environments
- 1-4 lines: $29.99/month/line
- 5-19 lines: $27.99/month/line
- 20+ lines: $24.99/month/line
- Includes additional calling features like visual voicemail and call groups
- Provides a dedicated team for set up and onboarding
- 1-4 lines: $39.99/month/line
- 5-19 lines: $37.99/month/line
- 20+ lines: $34.99/month/line
But Vonage’s plans are much more flexible than this list would have you believe. They offer a smorgasbord of add-on features to choose from, including visual voicemail, call recording and toll-free numbers.
Plus, they make it easy to purchase the hardware you need by providing you with a large selection of phones that have been tested for compatibility with Vonage. However, if you already have the hardware in place, they will work with you to make sure you can get your current setup working with their service.
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1-VoIP is the most flexible VoIP service on this list, and it’s pretty cheap to boot, with a starting price of $14.97/extension/month.
Unlike many of the other providers on this list, 1-VoIP offers a “pay as you go” or “metered” option for phone service. Instead of paying a flat monthly fee for more minutes, you can opt to pay $0.02/minute in addition to the base $14.97/extension/month price. This works out pretty well as long as you keep your usage to 200 minutes per month or less (after this point, you’d do better upgrading to a higher plan).
1-VoIP offers three different plans:
- Starts at $14.97/extension/month
- Pay for what you use at a rate of $0.02/minute
- Starts at $19.97/extension/month
- Better deal if you use more than 200 minutes per month
- Starts at $24.97/extension/month
- Includes hardware costs
No matter which you choose, every 1-VoIP plan comes with the same standard features. And that’s great considering there are over 40 of them. They include:
- Configurable caller ID
- Digital queues
- Custom hold music
Unfortunately, 1-VoIP doesn’t have a mobile app, but you can use ZoiPer Softphone (a third-party app) to get all the same features (picking up and making calls, etc.) that you would have if 1-VoIP did have a mobile app.
Overall, 1-VoIP is a very good choice for businesses that need flexibility or aren’t sure how much they’ll be using their phone. According to its site, they have some of the highest customer ratings in the VoIP space, so if they’re to be believed, that’s a very good sign that you’ll likely have a good experience with their service.
5) GoToConnect (formerly Jive)
GoToConnect is a new offering that combines GoToMeeting’s audio and video conferencing capabilities with Jive’s VoIP phone service. The result is a one-stop communication package that provides everything most businesses will need to communicate effectively. It’s also entirely cloud-based, which may make it easier to maintain your hardware.
Overall, GoToConnect strives to be all-inclusive. Unlike other providers that price their services based on the features you select, GoToConnect bases its pricing entirely on how many users you’ll have. GoToConnect’s prices are:
- 1-4 users: $29.95/user/month
- 5-9 users: $25.95/user/month
- 10-24 users: $23.95/user/month
- 25-49 users: $21.95/user/month
- 50+ users: $19.95/user/month
As you can see, the more users you add, the less you’ll pay.
And GoToConnect offers all the same features regardless of how many users you have. There are over 80 features, so there’s no doubt that this is one of the most complete packages on the market.
Some of GoToConnect’s features include:
- Call routing
- International calling
- Wait time announcements
GoToConnect also stands out from the competition by offering features that are specifically designed for call centers, such as pre-call announcements, wait time announcements and unlimited call queues. It’s one of the only companies that seems to be making an active effort to appeal to the needs of contact centers.
Overall, GoToConnect provides a high-end business phone experience. Compared to other services we’ve covered, it’s a bit on the pricey side, with a starting price that’s double 1-VoIP’s lowest-cost option, for example. That said, if you need a service that’s jam-packed with features, GoToConnect is definitely worth a look.
Unlike some of the other options on this list, Grasshopper is a pretty small company with a fairly modest offering. Whereas RingCentral has over 2 million users, Grasshopper has served just 350,000 “happy customers.” However, a small user base can sometimes be a plus: With fewer users, the company can dedicate more time and effort toward each individual.
Most of the options we’ve looked at so far are geared towards traditional office setups with desk phones. However, Grasshopper is a better fit for freelancers, solopreneurs and small teams who are planning to use their cell phone to conduct business. Its main clientele is people who want a separation between their personal and business phones, but still want to use their mobile phone.
For example, real estate agents might want to give out their Grasshopper phone number to clients so that they can be easily reached without having to give out their personal number or carry around two phones all the time. It also alerts you when an incoming call is business-related so that you don’t get caught unprepared when you pick up the phone expecting a personal call and quickly realize that it’s a potential client.
Grasshopper offers two services: Grasshopper and Grasshopper Connect. The main difference between the two is that Grasshopper Connect doesn’t just unify your business phone service; it also lets you view calls, texts and emails from one place.
Unfortunately, Grasshopper doesn’t come cheap. With a starting price of $26/month, it’s definitely a bit on the pricey side, especially considering that they don’t offer any hardware. Grasshopper’s pricing is as follows:
- Solo: 1 number, 3 extensions, starting at $26/month
- Partner: 3 numbers, 6 extensions, starting at $44/month
- Small Business: 5 numbers, unlimited extensions, starting at $80/month
Keep in mind that with any plan you’ll be treated to some innovative and advanced features, like auto-texting, which can automatically send a text to any missed calls to try to prevent them from taking their business elsewhere. Overall, a great business phone system for solopreneurs, freelancers and small businesses.
Ooma is a well-established VoIP provider with a long track record of customer satisfaction. For the past seven years, PC Magazine voted Ooma the number one business VoIP , and that should be enough to make anyone give it some careful consideration when looking for the best phone service for their business.
Ooma Office is an enterprise phone system for small businesses and includes “big business features at small business pricing ” — and they’re not lying. Ooma includes:
- Extension dialing
- Virtual receptionists
- The ability to keep your old number
- The ability to use the Ooma mobile to make and receive calls
For all this, Ooma charges $19.99/user/month. This fee stays the same no matter how many users you have, which keeps the pricing simple and free of unwelcome surprises as you grow your business.
All this sounds a bit too good to be true and, unfortunately, it is: Ooma doesn’t include the cost of hardware in its standard pricing. When you figure that in, Ooma doesn’t end up being as cheap as it seems. For example, its Business Phone Starter Pack costs $99.99 and comes with one Ooma base station and two wireless extensions, which are compatible with existing analog phones. Other packages that include actual phones are more in the $200 range.
That said, it is possible to use Ooma exclusively with the mobile app, which would eliminate the need for hardware. However, if that’s what you’re looking for, you may be able to find better and cheaper options for your needs.
Assuming you do go all in with Ooma, you’ll be happy to know that they provide superb customer service. Plus, they are known for having an easy set-up process, so between the ease of use and the helpline, you should be sailing smoothly after the initial financial investment.
Phone.com differentiates itself in three ways:
- It’s HIPAA and HITECH compliant, so it’s a natural choice for medical professionals and businesses
- It’s the only service on this list that’s capable of dialing 911
With plans starting at just $9.99/month, Phone.com is the cheapest VoIP phone service you’ll find. It also provides a good deal of flexibility with its pay-per-minute options.
Phone.com divides its pricing into two subgroups: pay-per-minute plans and unlimited plans.
The pay-per-minute plans have the following prices and features:
- $12.99/month ($9.99/month if paid annually)
- 300 minutes/month
- 1 local or toll-free number
- 5,000 SMS messages
- Over 40 features, including call queuing and voicemail to email
- $19.99/month ($14.99/month if paid annually)
- 500 minutes/month
- 2 local numbers or toll-free numbers
- 10,000 SMS messages
- Additional features like premium hold music and automated voicemail-to-text
- $39.99/month ($29.99/month if paid annually)
- 1,000 minutes/month
- 3 local or toll-free numbers
- 20,000 SMS messages
- Additional features like call analytics and 300 call recording minutes
The unlimited plans all have unlimited monthly minutes and unlimited user extensions:
- $29.99/extension/month ($24.99/extension/month if paid annually)
- Call forwarding
- $37.99/extension/month ($32.99/extension/month if paid annually)
- 2 local or toll-free numbers
- Premium hold music
- $59.99/extension/month ($49.99/extension/month)
- Call analytics
Despite their differences, all of these plans come with the same set of base features, such as:
- Audio conferencing
- Dial-by-name directory
- Auto attendant
As a whole, Phone.com is best viewed as a very good budget option. A good portion of the testimonials on its site mention that Phone.com is more reasonably priced than other comparable services and, luckily, they don’t seem to sacrifice any call quality to reach this low price point. Instead, it simply gives users a variety of options to choose from so that they won’t have to pay for more than they need.
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How to Evaluate VoIP Business Phone Services on Your Own
In this guide, we’ve looked at eight of the best VoIP business phone services, but this list is by no means exhaustive. So if none of these options quite fits the bill, how do you go about evaluating other phone system offerings?
You can start by asking yourself these questions:
✔️ How large is my business?
Business phone systems often design their offerings with a certain type of business in mind, be it a solopreneur, small business or an enterprise. While many services offer different plans for different business sizes, some services are simply better equipped for one type.
When looking into VoIP providers, evaluate how their services might fit into your business. Does it provide enough extensions? Is the number of minutes sufficient for your needs?
✔️ How much phone time do you anticipate?
Business phone services tend to price their plans partially around the number of minutes provided. If you and your employees are constantly picking up the phone, then you’ll likely need a provider that offers unlimited plans. But if making calls is a rarity, you may want to go with a metered or pay-per-minute option.
✔️ What’s my budget?
It should come as no surprise that staying within budget is essential. Some providers are simply priced more competitively than others, so you’ll have to consider how that fits into the bigger picture. For example, can you afford more features? Or will you be better off with fewer features but a lower price tag?
✔️ What features are absolutely essential?
Every business has its own unique needs to consider. Some businesses will require phone services that have desktop apps, while others will fare just fine with a mobile app. Make a list of the reasons that you need a business phone service in the first place, and score each option on how well it meets those needs.
As with most decisions, there is no one-size-fits-all phone solution. Business phone services come in many different shapes and sizes, so you’ll need to find the one that fits best into your larger business strategy.
Despite the rise of text messaging and email in business communications, nothing really beats the ease of being able to simply dial up a colleague or client, make a personal connection, and talk things out.
Although video conferencing is gaining popularity, it’s often viewed as more intrusive than phone calls. In fact, landline phone calls are still the go-to method:
A recent BrightLocal survey found that 60% of consumers prefer to contact businesses by phone.
Today, voice over internet protocol (VoIP) services offer a low-cost and high-tech alternative to traditional public switched telephone network (PTSN) solutions. In short, VoIP services push your voice through and internet connection instead of a traditional phone line.
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