On 22 November, the Chancellor of the Exchequer, Jeremy Hunt, delivered his Autumn Statement to Parliament. Mr Hunt outlined most of his “110 measures to help boost the economy”, with significant statements relating to a cut in the National Insurance tax and to reform work-related state benefits.

Below are the key points from the statement we think you should know.

Tax and Pensions

• The chancellor has cut national insurance taxes by 2%, from 12% to 10%, beginning January 2024, impacting around 27 million workers.
• The self-employed will benefit from changes to two other areas of National Insurance specific to them. Hunt said this would save a self-employed person about £350 a year.
• State pension payments are to rise by 8.5% to £221.20 a week, worth almost an extra £900 a year, stating the triple lock will be “honoured in full”.
• The chancellor also announced a consultation on ‘lifetime pensions’. This is where people could choose to have one pension throughout their working life rather than having a different one with each employer.
• There was speculation that the inheritance tax would be abolished, but this was not the case.
• Local housing allowance rates will be increased to equal the 30th percentile of an area’s market rents in 2024/25. Rates will then be maintained in cash terms in subsequent years.
• Tobacco duty has been increased by 10%, while alcohol taxes have been frozen until 1 August.

Jobs and work

• Mr Hunt also raised the National Living Wage to £11.44 an hour, up from £10.42 starting April 2024. This now applies to those 21 and over (formally 23).
• National insurance – including cutting the rate of Class 1 NICs paid by employees from 12% to 10% from 6 January 2024 and cutting the main rate of Class 4 NICs, paid by the self-employed, from 9% to 8% from 6 April 2024.
• Hunt also makes a permanent tax break for businesses that allows them to offset investment in items such as new IT equipment and factory machinery against corporation tax.

ISAs

• Whilst subscription limits for ISAs will be frozen for 2024/25, more flexibility around ISAs will be available from April 2024.
• The account opening age for any adult ISA (cash or stocks and shares) will be 18 from April 2024.

Economy 

The OBR (Office for Budget Responsibility) says:

• “The economy will grow more slowly in the medium term than forecast in the spring budget”.
• “In 2024, growth is only expected to be 0.7%, falling short of the 1.8% forecast”.

What does the Autumn Statement 2023 mean for you?

For better or worse, most of the government’s decisions today will affect your money. But what does it mean for your finances?

Tax cuts and benefit rises

Both employees and self-employed workers will pay less in national insurance from next year. However, these changes don’t offset the freeze in income tax and national insurance thresholds, which determine when you start paying each tax.

Lower paid workers will also benefit from a boost to their wages, with the national minimum wage rising by 9.8% from next year.

Businesses appeared to be among the biggest winners. The Chancellor announced that the government’s ‘full expensing’ policy for firms would become permanent. This allows them to effectively deduct what they invest in capital assets (such as IT equipment, plant or machinery) from their taxable profits.

From April 2024, most benefits and tax credits in England and Wales will also increase by 6.7% (in line with September’s inflation figure).

Pensions and savings

Since 2010, increases to the state pension have been based on the so-called ‘triple lock’, which guaranteed yearly payments would rise in line with the largest of September’s inflation, average wage growth, or 2.5%. While there was speculation that the government may change it this time, Mr Hunt confirmed it would rise by the full 8.5% (as per the triple lock formula).

The Government are also consulting on giving people one pension pot for life. If this happens, you can ask any new employer to pay pension contributions into a scheme you already have, which may make it simpler to manage future planning.

Savers will also benefit from various planned changes to ISAs designed to make them simpler and easier to use. This includes making it possible to pay into multiple ISAs of the same type in each tax year and allowing partial transfers of ISA funds, regardless of when you paid in the money.

What has the market reaction been to the Autumn Statement 2023 ?

There were no real surprises for investors in the Autumn Statement, and markets were relatively unmoved by it. UK government bond yields were higher (prices fell) and sterling slightly lower in the hours following the Chancellor’s speech. This was amid concerns that inflation and interest rates could remain higher for longer, but there weren’t any major shifts.

Want to know more?

Fill in the below form to download our comprehensive guide on the 2023 Autumn Statement:

In the meantime, if you have any questions about your finances or how the statement changes affect your situation, please contact one of our team.

Sources:

https://www.bbc.co.uk/news/business-67484095

https://www.theguardian.com/uk-news/2023/nov/22/autumn-statement-2023-key-points-jeremy-hunt