On 22 November 2023, Jeremy Hunt delivered his Autumn Statement. The general message… We’re making progress, but we’re not out of the woods yet!
We’re currently living through a cost of living crisis, with some sections of the population really feeling the pinch. Inflation has dropped, but is still dominating headlines. It currently sits at 4.6% for the 12 months to October 2023, which, although much lower than it has been all year, is still significantly higher than the 2% target imposed on the Bank of England.
Jeremy Hunt announced that the government have met the three economic priorities (halve inflation, grow the economy, reduce the debt) they set out in January 2023. As such, he is now focused on achieving higher growth and productivity.
Here are the key headlines and what they might mean for you…
State Pension
The State pension triple lock is staying in place. This means that State Pensions will increase each year by the higher of:
- Inflation as measured by the Consumer Prices Index (CPI) in September,
- The average increase in wages across the UK from May to July, or
- 2.5%.
This means that the state pension will rise by 8.5% in 2024/25, as will pension credit.
National Insurance cut
The surprise package was a cut to National Insurance (NI) for employees and the self-employed.
The main rate of employee NI (class 1) will be cut from 12% to 10% from 6 January 2024. In the 2024/25 tax year, class 4 NI contributions will be cut from 9% to 8% for the self-employed who have net profits between £50,270 and £12,570.
The government is also abolishing class 2 NI contributions. Those with profits under £6,725 and others who pay this voluntarily to buy state pension years will continue to be able to. For those paying voluntarily, the government has decided to maintain the current rate of £3.45 per week for 2024-25.
Lifetime allowance
There were no new announcements, however, Jeremy Hunt did confirm that the abolition of the lifetime allowance will happen via the Autumn Finance Bill 2023 and is effective from 6 April 2024.
ISA flexibility
ISA limits will remain the same, however, ISA holders will be able to contribute to multiple ISAs of the same type in each tax year from April 2024 as well as make partial transfers.
The types of investments that can be held in a Innovative ISA have also been extended to include Long Term Asset funds, open-ended property funds and fractional share contracts.
Small pots – a pension for life
The government want to make it easier for employers to pay into an employees existing pension scheme when they change employer.
All in all, a fairly benign Autumn statement. The only real difference maker will be the changes to NI. The other bits are more fiddling around the edges.
If you would like to discuss anything in this Autumn Statement, please do get in contact.
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