Autumn Statement – What it Means for You
Chancellor Jeremy Hunt has laid out strategies to combat price increases and re-establish the UK’s credibility in global markets.
Things may well get difficult as a result, but the Chancellor claims that the most defenceless members of society are being protected. Some of the ways the Autumn Statement will possibly impact you and your business are listed below.
Personal Tax
Over £12,570 in yearly earnings triggers the start of income tax, which is levied at 20%. After that, you are subject to a 40% tax rate on income exceeding £50,270 per year, albeit the bands alter in Scotland. These bands, or tax thresholds, have already been set to remain the same until 2026 rather than increasing in step with inflation as you might typically anticipate.
That freeze has now been prolonged by the Chancellor for an additional two years. As a result, any pay increase could people into a higher tax bracket. Even if it doesn’t, it will almost certainly result in more people paying taxes on a larger portion of their income.
The highest rate of income tax, which is currently 45% on incomes over £150,000, will instead be paid starting in April on earnings of more than £125,140, according to the Chancellor. Therefore, the wealthiest earners may have to pay hundreds more in income tax each year.
Plans to lower the standard income tax rate were mentioned in both the March Spring Statement and the September mini-budget. Naturally, no such assurances were made this time.
The dividend allowance (the amount you can earn each year in dividends, if you own shares, without paying tax) will be reduced from £2,000 to £1,000 next year and then to £500 starting in April 2024. Additionally, the threshold at which persons begin to pay inheritance tax will be frozen. In 2018, the allowance was set at £5,000.
Additionally, the annual exemption from paying capital gains tax will decrease from £12,300 to £6,000 in April and then to £3,000 a year later. When you sell an asset, such as stock in a firm or a second home, you must pay this tax.
Assistance with Energy Costs
Currently, the Energy Price Guarantee, a government programme, caps domestic energy costs. It restricts the cost per unit of energy consumed rather than the overall cost. It indicates that, as of October, the average household paying £2,500 year for gas and electricity.. The cap was set to expire in April, leaving open the possibility of the average yearly price increasing to £3,700.
According to Mr. Hunt, this cap would be extended for a further year but would be less generous than it is today, costing an average household £3,000 annually. According to Mr. Hunt, this will save the average household £500 annually.
Cost-of-living Payments
In the second half of the year, numerous cost-of-living adjustments were made, including a £400 reduction in everyone’s energy costs for the coming winter. Others were aimed at the elderly, those with impairments, and those on lower incomes receiving benefits.
The uniform payout will expire, but there will be more focused assistance the next year. This will equate to £900 for means-tested benefit households, £300 for pensioner households, and £150 for disability benefit households.
This winter, instead of the originally anticipated £100 payment to those who use heating oil, there will be a payout of £200.
Increased State Pension in April
According to the “triple lock,” the state pension is expected to rise annually in line with the highest of inflation (as determined by the September CPI), the average wage growth in the UK, or 2.5%.
The Chancellor finally announced that the state pension would increase by 10.1% to keep up with inflation after months of speculation.
Benefits to Increase
According to the law, some disability benefits, including the personal independence payment, must increase yearly in step with inflation. Based on the inflation rate from the previous September, which is 10.1% this time, that occurs in April.
However, Ministers have the authority to increase tax credits and the majority of means-tested benefits, most notably universal credit, which is enjoyed by nearly six million individuals.
The Chancellor said that these would also increase by 10.1%, which would result in a benefit of about £600 for a family receiving universal credit the following year.
Instead of the 11% potential growth under prior regulations, Mr. Hunt stated that the government will cap the increase in social rents in England at a maximum of 7% in 2023–2024.
The National Living Wage
This applies to persons who are 23 years of age and over, is £9.50 per hour. In April, this will increase to £10.42, a change that will impact roughly two million people. Employers are obligated to cover this expense.
Council Tax Rates
The Chancellor indicated he will raise this threshold to 5%. Currently, authorities in England must call a referendum if they wish to raise council tax by more than 3%.The typical Band D council tax bill might increase by £250 annually by 2027–2028, according to the OBR.
Stamp Duty Reduction
The Government announced in September that a reduction in stamp duty tax for select homebuyers in England and Northern Ireland would be permanent.
The threshold for paying stamp duty has increased from £125,000 to £250,000 (£425,000 for first-time buyers), and instead of applying to properties up to £500,000, the discounted stamp duty rate for first-time buyers now applies to properties up to £625,000.
Now that a deadline has been established by the chancellor, these cuts will be undone at the end of March 2025.