Autumn Budget Statement 2023: what is it, and how will it impact me?
Chancellor Jeremy Hunt has announced the UK government’s tax and spending decisions for the next year in the Autumn Budget Statement today (22 November).
Update: Spring Budget 2024
What is the Autumn Statement?
While the Budget is usually the main annual fiscal event due to the announcement of major tax and spending changes, the Autumn Statement looks at the state of the economy and sometimes announces spending decisions.
The Autumn Statement tends to happen in October or November, with questions allowed from the shadow chancellor and MPs.
The chancellor also addresses the Office for Budget Responsibility’s (OBR) economic and fiscal outlook, which is released on the same day.
The government has been aiming to halve soaring inflation, which has fallen from around 11% to 4.6%.
The OBR expects headline inflation to decline to 2.8% by the end of 2024 before falling to around 2% in 2025, which is longer than forecast.
How will the Autumn Statement affect my finances?
For better or worse, the majority of the government’s decisions today will affect your money.
We’ll run through the biggest announcements from the Autumn Statement and explain how it’ll impact you.
Before we jump in, if you’re worried about how to navigate these changes and need guidance, it’s worth talking to a financial adviser who can recommend the best course of action.
Unbiased can connect you to an FCA-regulated financial adviser - your first consultation is free.
National insurance
The rate of national insurance will be cut from 12% to 10%, which will affect 27 million workers.
This cut will come into effect from 6 January 2024, with the average worker (earning £35,000 a year) saving £450 annually.
What about the self-employed?
Hunt plans to abolish Class 2 contributions (£3.45 per week) for self-employed workers who earn more than £12,570.
This will save the average self-employed person £192 a year.
Self-employed workers who pay Class 4 contributions of 9% on earnings between £12,571 and £50,270 will benefit from a cut to 8%.
These changes are expected to come into effect from April 2024.
UK state pension
The UK state pension rise has been confirmed, and it’s the 8.5% increase that retirees were hoping for.
There were reports that ministers considered adjusting the triple lock policy by looking at earnings, excluding bonuses.
After committing to the triple lock, the new state pension will rise to £221.20 per week (around £11,502 annually) in April 2024, an increase of 8.5%.
For those under the old state pension (who reached state pension age on or before 5 April 2016), it’ll increase to £169.50 per week (around £8,800 a year).
“There had been suggestions the Treasury was considering arguing NHS bonus payouts had inflated July’s earnings figure and instead opt for the lower 7.8% figure, which strips out bonuses, said Tom Selby, head of retirement policy at AJ Bell.
“This could have saved the Exchequer somewhere in the region of £1 billion but would also have left the chancellor open to the accusation of shifting the state pension goalposts.
“Given where the Conservatives find themselves in the polls and the fact older people hold huge sway at the ballot box, it is hardly surprising they opted to target fiscal restraint elsewhere.”
Pensions reforms
The government will consult on whether savers will get “a legal right to require a new employer to pay pension contributions into an existing pension.”
Hunt suggests that these reforms could result in an extra £1,000 a year in retirement savings for the average worker who starts saving when they turn 18.
“Current lack of understanding of savings vehicles amongst the average saver could result in savers making poor decisions about where their pot is invested, perhaps making decisions based on the cheapest solutions or those that are the most marketed, rather than those that offer the best value for money,” said Hannah English, head of DC corporate consulting at Hymans Robertson.
Mortgage guarantee scheme
Introduced in 2021, this scheme aims to help people buy a home with only a 5% deposit by encouraging lenders to offer more 95% mortgages, which the government backs.
This scheme has been extended by 18 months and will now close at the end of June 2025.
ISAs
There have been many reports suggesting that Hunt will reform the ISA market to encourage more investment.
ISAs offer a tax-efficient way to save, as any interest, income or capital gains from the money held in an account are not taxed.
One of the biggest changes from April 2024 will allow savers to open multiple ISAs of the same type in a tax year without losing their tax-free ISA allowance.
This will allow savers to access more competitive rates, although annual allowances for ISAs will remain frozen in the next tax year.
People will also be able to include long-term asset funds and open-ended property funds with extended notice periods in an Innovative Finance ISA.
How can a financial adviser help?
If you need help navigating these changes, you don’t have to do it alone.
Unbiased can connect you with a local financial adviser who can look at your circumstances and recommend the best course of action for you.
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