The Autumn Statement 2023 In Focus

Written by Cher

November 27, 2023

The Autumn Statement is clearly the topic of the moment. Many of us are yet to estimate the ramifications of the Chancellor’s announcement, but we all remain hopeful the prediction of a falling average inflation rate to 2% by 2025 and economic growth doubling to 1.4% by the same period will come true. This forecast is promising. However, only time will tell how it affects smaller businesses and whether people will start to feel confident in spending again. Here’s a brief focus on how the Autumn Statement affects Tax, Pensions, Investments and Wages.

The main topics of the autumn statement.

Tax

Changes to National Insurance payments were announced. PAYE employees will see a small reduction in their contributions from the 6 January. Amendments to company payrolls will need to be in effect to ensure payroll compliance for this change. There are further reforms in how National Insurance is paid by the self-employed. Reportedly, there will be an average annual saving of £350 but each individual will be affected differently. It is advisable to request a personal recalculation of the payment at your next accountancy review.

Pensions

Similarly, to the rise in the minimum national wage, the rise in the state pension will hopefully provide some alleviation from the household budgetary struggle for pensioners. It’s also reasonable to expect to see this adjustment in spending power to have an effect for those providing goods and services. 

The Chancellor has also announced a shake-up of the pensions system. This will take shape in the form of plans for a new role for the UK Pensions Protection Fund to become a consolidator of small corporate pension schemes. It is anticipated that by 2030 the majority of workplace pensions will be in funds of £30bn or larger. This will constitute a big shift from the current pension market. Alongside this pension plan are additional changes which will allow employees to ask their employer to pay into a fund of their choice. These changes are designed to give workers greater control over where they build their retirement funds.

It is thought these changes will alleviate the problem of multiple small pension pots for pension savers. This is especially prevalent for those who have switched jobs throughout their careers. Thereby reducing the need for so many pension transfers and the difficulty in tracking down their savings in later life. There is reportedly £27bn sitting in lost pension pots!

The main investments affected by the autumn statement.

Investments

Individual savings accounts are also to be overhauled. From April 2024, savers will be permitted to pay into multiple accounts of the same type. However, the £20,000 tax-free allowance will remain unaltered. Savers and investors will soon be able to ask for a partial transfer of an ISA fund to another provider. Thereby creating increased flexibility in the savings market and will likely lead to some competitive rates for those transferring funds. The government has also committed to extending the tax advantages of Venture Capital Trusts and the Enterprise Investment Scheme for a further 10 years until 2035. Allowing the post-brexit government inquiry into the venture capital market to report its findings before a final decision is made.

Property

The Chancellor announced additional plans to consult on new planning rules. The government is intending to allow any house to be converted into two flats, provided the exterior remains unchanged. This was cited as a part of a raft of measures aimed at meeting new homes targets and unlocking the planning barriers to building new homes.

The government will also unfreeze the local housing allowance. Aimed at helping families with lower incomes and who rent their property from private landlords. The rates have been fixed since 2020 despite the rapid increase in rents to almost a 3rd higher than they were before the pandemic.

The main points of the autumn statement that will affect employees

The Minimum Wage

Last but not least, the minimum wage will rise to £11.44 per hour. For many businesses is a double-edged sword. On one hand it will hopefully give customers and clients more freedom to afford services and goods. Especially the positive impact for second wage earners and the improvement it will bring to the family budget. However, for employers paying staff at the minimum wage, that’s an increase of £1.02 per hour on their wages bill. Additionally, it’s probable there will be pressure from all staff to see a similar rise in their hourly rate.

The Autumn Statement in Conclusion


Overall, the Autumn Statement has been received with a mixture of scepticism and relief. Broadly speaking, commentators are pleased that some tax cuts have come into effect. However, the Institute for Fiscal Studies has pointed out that the tax cuts are being paid for by cuts in public service spending. Some commentators remain disappointed that there were not more extensive tax cuts and suggest it would have been more beneficial to raise the personal allowance in line with inflation. They also point out there remains anticipated rises in the cost of energy. Thus, still placing pressure on household incomes for 2024.

Nicole Managing Director

Nicole x

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