Autumn statement – what it means for you
The autumn statement was delivered today by the chancellor Jeremy Hunt who set out plans for tax and public spending for the next 12 months.
A tax cut, increases to benefits, pensions and housing allowance, and a freeze on booze duty all sound like vote winners but what difference will they make to the money in your pocket?
Cut to national insurance
Currently, employees earning more than £12,750 annually pay 12% national insurance, while the self-employed pay 9%.
From 6 January, the self-employed will pay 8%, saving them an average of £350 a year. While employees will pay 10%, saving a worker on the average salary of £35,000 over £450 a year.
Millions of households on benefits, such as universal credit, will be around £470 better off from next April, after the chancellor confirmed he’d uplift payments in line with September’s inflation figure, as is usual.
Mr Hunt said:
“Firstly, for those on the lowest incomes. I understand the concern some have about the effect on work incentives of matching benefit increases to inflation.
“I know there has been some speculation that we would increase benefits next year by the lowest October figure for inflation.
“But cost of living pressures remain at their most acute for the poorest families.
“So instead, the government has decided to increase universal credit and other benefits from next April by 6.7% in line with September’s inflation figure, an average increase of £470 for 5.5 million households next year.”
Government honours triple lock
The state pension will rise by 8.5% from April 2024. Under the pension triple lock, the value of the state pension rises by the highest of inflation, wages or a flat 2.5%. But with wage growth hitting a record high over the summer, experts questioned whether the government would keep the measure in place.
Honouring the triple lock brings the value of the state pension to £221.20 a week, an increase of £900 a year to £11,502.40.
Local housing allowance freeze lifted
Private renters have something to celebrate after Jeremy Hunt announced that the freeze on local housing allowance (LHA) will be lifted.
LHA is the rate used to work out what you can claim in financial help from the government when renting from a private landlord.
It’s based on the number of bedrooms and takes into account the ages of household members, disability, care history and local rent rates.
It’s been frozen since 2020 and is based on rents from three years ago. The move will give 1.6 million households an average £800 of additional support a year.
Freeze on booze duty
Drinkers up and down the country have something to celebrate after the chancellor confirmed he’s freezing the tax on alcohol and has extended the business rate relief for pubs.
Hike in tax on tobacco
Smokers didn’t fare as well with the biggest ever price hike on tobacco products.
Duty on hand-rolling tobacco will increase by 10% above the retail price index (RPI), while the price of other tobacco products will increase by 2% above RPI. All changes will take place from 6pm today (22 November).
The increase follows a similar price rise in April this year, with the price of a pack of cigarettes increasing by 12%, taking the cost of a pack of 20 cigarettes above the £14 mark – a rise of £1.54 per packet.
More to be done
Commenting on the announcements, Sebrina McCullough, head of external relations here at Money Wellness, said:
“There are some real positives in today’s autumn statement. We welcome Jeremy Hunt’s announcement today that universal credit and benefits will increase in line with September’s inflation rate and a cut in national insurance contributions from 6 January will ensure more money in people’s pockets. And by unfreezing local housing allowance, he’s given a boost to millions of low-income renters.
“However, it’s still a bleak outlook for many, with food prices rising by over 25% in the past two years and a cold winter ahead. We’d have liked to have seen some provision for energy support for the most financially vulnerable who’re facing a hike in heating bills from January, combined with substantial rises in standing charges – many households no longer have the option to keep bills low by not turning on their heating.
“The chancellor could have also taken thousands of families out of poverty by doing away with the two-child cap on benefits – we feel this is a real missed opportunity. Abolishing the cap would cost £1.3 billion a year but the impact would be transformational for low-income families, taking 250,000 children out of poverty with a further 850,000 becoming less deeply entrenched in poverty.
“There’s still much more to be done to help households through the cost-of-living crisis.”
A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.
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