Jeremy Hunt, the recently appointed Chancellor of the Exchequer, delivered his Autumn Statement on 17 November. In this much awaited announcement, the Chancellor confirmed that the UK is officially in a recession and detailed the government’s plans to try to grow the economy through a number of spending cuts and tax rises.

But what are the key changes in the Autumn Statement and how might they affect you?

Let’s look at some highlights

Changes to taxation and wages

  • The main national insurance and inheritance tax thresholds are frozen for another two years, until April 2028.
  • The Personal Allowance and higher rate threshold of £12,570 and £50,270 respectively will remain at these levels until 5 April 2028. Spring Budget 2021 originally froze these amounts through to 5 April 2026.
  • The threshold for when the highest earners start paying the top ‘Additional’ rate of income tax will be reduced from £150,000 to £125,140. This means more people will pay the Additional rate of tax. 
  • The annual exempt amount for capital gains tax will reduce from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024.
  • Tax-free allowances for dividends will be cut from £2,000 to £1,000 from April 2023, and to £500 from April 2024.
  • The minimum wage for people aged over 23 will increase from £9.50 to £10.42 an hour from next April.

The Scottish Parliament has the power to set income tax rates and bands that apply to Scottish taxpayers non-savings, non-dividend income. In addition, the Welsh Government has the power to set income tax rates applicable to non-savings, non-dividend income.

Changes to benefits and state pension

  • Some good news for pensioners – Mr Hunt confirmed that the state pension would rise by 10.1% from April 2023. There had been many rumours and discussions about whether this would change but it is now official, and it means an average pensioner will see a £18.70 per week uplift. However, it’s still likely that pensioners will feel the pain of soaring living costs.

Les Cameron, Head of Technical, M&G Wealth, agrees that the triple lock will be welcomed by many pensioners but says:

"The actual rates of inflation on what pensioners spend a lot of their income on, eating and heating, have seen inflation much higher than the 11% headline rate and in the case of energy bills more than double. Pensioners will still be feeling the pinch, even with this rise, and careful budgeting and investment advice will be just as important as it currently is."

  • If you’re on Universal Credit (or other benefits), it’s likely that your benefits will increase in line with inflation. However, changes to Universal Credits are very dependent on your individual circumstances. As an example, a single person over the age of 25 on Universal Credit could see payments rise by nearly £34 a month.

Bills and the cost of living

  • There continues to be bad news when it comes to energy prices. The typical household will see energy bills rise from £2,500 now to £3,000 a year, from April.
  • People who receive means-tested benefits, disability benefits and pensioners will receive cost of living payments but these will not apply to everyone.
  • If you’re a social housing tenant renting a property, the government will cap the increase in social rents to a maximum of 7% in 2023/24. This will save the average tenant £200 next year.
  • If you own an electric car, from April 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty (essentially a vehicle tax). Stamp Duty Land Tax cuts introduced in Kwasi Kwarteng’s mini-budget will remain in place, but only until 31 March 2025.

There are many more changes announced in the Autumn Statement which you can read in full detail on the Gov UK website.

What to do next?

Changes in policy are likely to affect the budgets of many households and may add new pressure at home. If you’re struggling with the cost of living or concerned about how any of the tax rises might affect you then it’s important that you get help.

The Citizens Advice Bureau

To learn more about what help is at hand, you may find it useful to contact the Citizens Advice Bureau. They offer advice and support on paying bills, locations of food banks, mental health support and other useful information about coping in today’s uncertain times. You can also find a page to get help with the cost of living.

Getting financial advice

Life is full of twists and turns, so if you’re looking for help managing finances you may find it useful to work with a financial adviser. A financial adviser will look at your overall situation and longer-term goals to create a manageable plan for you. They’ll be able to look at ways to help you reduce the amount of inheritance tax and/or capital gains tax you pay through estate planning, look at things like pension contributions, unused ISA allowances or other ways to make your money work harder. The Autumn Statement changes don’t come into immediate effect, so tax year-end planning could really help you get on the front foot.

If you don’t already have an adviser you can find a financial adviser that's right for you.