In his much-anticipated Autumn Statement, the Chancellor of the Exchequer has announced tax cuts for millions in the UK in a bid to drive economic growth.
Here are five main announcements that will impact your finances as we head into next year:
1. Cuts to National Insurance for the employed and self-employed
The headline rate of National Insurance for employed people has been reduced by 2%. The Chancellor also announced a tax cut and simplification of National Insurance Contributions (NICs) for the self-employed. This includes abolishing an entire class of NICs and cutting the top rate of NICs from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year. However, frozen income tax thresholds mean that the true benefit of these cuts remain relatively minor.
2. The state pension and benefits will continue to increase in the same way
Many pensioners and those on low incomes will be relieved that the Government will continue to use the existing measures to increase the state pension and benefits. This means next year’s full state pension* will increase to £221.20 per week, or £11,502.40 per year. This level of uplift follows the inflation-matching boost of 10.1% that saw the 2023/24 state pension rise to £203.85 a week, or £10,600 annually. Similarly, benefits will be increasing by 6.7%.
*for those reaching state pension age from 6 April 2016
3. People allowed multiple ISA subscriptions of the same type
The Chancellor has unveiled plans allowing people to have multiple ISA subscriptions of the same type every year. Starting from April 2024, this will enable people to shop around to get the best rate.
4. Pension pot for life policy
Currently, eligible new employees must be automatically enrolled into a pension scheme of their employer’s choosing. The Chancellor announced a pension ‘pot for life’ proposal, which will change this by ensuring the pension pot can move with the employee from job to job. This could help people avoid having multiple small pensions.
5. Extension of the mortgage guarantee scheme to 2025
The mortgage guarantee scheme offers lenders the financial guarantees they need to offer 95% mortgages (with the buyer paying a 5% deposit) on a house worth up to £600,000. The scheme was due to close to new accounts on 31 December 2023, but the Chancellor has announced an extension until June 2025.
Despite several large announcements, there were no announcements in areas such as inheritance tax reform, stamp duty changes, and the creation of a British ISA. These may all be areas of change for the Budget in 2024.
If you have questions on how these changes will affect your personal finances, you should seek advice from a financial adviser. If you don’t already have one, we can help.
Quilter Financial Advisers is a nationwide team of experienced advisers who can help you offering tailored financial advice with exceptional service.