5 things you need to know about the Autumn Statement

What did the Chancellor tell us exactly and why does it matter?

Authored on
24 Nov 2023
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Read time
  3 minute read

There were plenty of rumours circulating before the Autumn Statement, but it looks like some of the more radical ideas have been shelved by the Chancellor, Jeremy Hunt – well, for now at least.

Changes to inheritance tax, income tax and major ISA shake-ups were absent from the announcement. Though they could still make an appearance at next Spring’s Budget, and we did see some minor tweaks to ISA rules.

Laura Suter, AJ Bell’s head of personal finance, is here to walk you through five big changes from the Autumn Statement, which could potentially affect you and your money.

1. Cut to National Insurance

The headline announcement from the Autumn Statement was a 2% cut to the main rate of national insurance (NI) – a type of tax paid on your income. The decision to slash this from 12% down to 10% is estimated to cut taxes for 27 million people.

Unlike income tax, NI isn’t paid by pensioners, so this only impacts working households. Our calculations show that the tax cut is worth over £1,500 a year for a working couple, depending on how much they earn.

Although the NI cut is welcome, it doesn’t make up for the huge increase in government tax revenues from ‘fiscal drag’ – the impact of wages rising but income tax thresholds staying the same. The Office for Budget Responsibility reckon fiscal drag will raise nearly £45 billion for the government by 2028-29.

2. NatWest share offer 🤝

The Chancellor promised to sell off the government’s remaining stake in NatWest – offering a chunk of shares up to the public. More details about this offer are yet to come and, while this is potentially a good opportunity for investors, it’s important to remember to assess whether the bank’s shares fit with your overall investment goal before taking part.

3. Pensions ‘pot for life’ 🍯

The government plans to give savers the legal right to choose a single pension scheme for all their workplace pensions. At the moment, UK companies are required to set up a pension scheme for their employees that meets certain minimum standards. But the employer usually chooses the scheme and doesn’t have to offer more than one.

The ‘pot for life’ plans would let someone have just one workplace pension which they choose, and moves with them between jobs. The idea is to reduce the number of pensions people build up, making it easier to keep on top of them. But these are just proposals at this stage, and we’re still a long way off them becoming a reality – if they do!

If you want to combine your pensions with a single provider there are plenty of options out there, and there’s no need to wait for this government plan to do it. Its free and easy to transfer your old pensions to Dodl. Just make sure it’s the right choice for you before making any moves.

4. Simplified ISAs 📣

The Chancellor announced some simplifications to the ISA system, although stopped short of a major overhaul.

Kicking off from April 2024, the new rules include:

  • allowing payments to different ISAs of the same type every year
  • allowing partial transfers of ISA payments from the current year
  • removing the requirement to reapply for an existing unused ISA
  • expanding the Innovative Finance ISA to Long-Term Asset Funds (LTAFs) and open-ended property funds
  • allowing ‘certain fractional shares’ as eligible ISA investments

Jeremy Hunt also announced a freeze on the current allowances for ISAs (£20,000), junior ISAs (£9,000) and lifetime ISAs (£4,000) in 2024/25.

We really think the Chancellor had an opportunity to simplify ISAs, which for all intents and purposes he bottled at this Autumn Statement. 🤷

5. State pension 🔒

The government stuck to their ‘triple-lock’ promise for pensioners and committed to an 8.5% increase to the state pension next year. It means retirees will receive an inflation-busting state pension boost from April next year, with the figure of 8.5% based on the average earnings increase from July this year.

Till next time 📅

That covers most of the major announcements from 2023’s Autumn Statement. It’s always a good one to keep an eye on as it can often make a difference to our monthly take-home and how we plan our personal finances.

🔔 Always remember though AJ Bell and Dodl don’t give personal financial advice, and this article doesn’t bring you that - just info. If you need advice on tax, investments or anything else, make sure you reach out to a suitable and qualified financial advisor.

 


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