On 17 November 2022, chancellor Jeremy Hunt delivered his autumn statement.
It had been a difficult year for the government. Scandals had rocked the Boris Johnson administration, leading to a historic raft of resignations. Then Liz Truss’s tumultuous tenure ended following the failure of her and Kwasi Kwarteng’s mini-Budget.
Jeremy Hunt delivered his statement as the fourth chancellor of the year, answerable to the third prime minister during the same period. And he had his work cut out.
With inflation at a 41-year high and the cost of borrowing also soaring – as a result of increasing rates and the fallout from the “fiscal event” – Hunt promised difficult choices and pain for many UK households.
This came in the form of £55 billion of tax rises and spending cuts. But how were these “consolidations” meted out and were you an autumn statement “winner” or a “loser”?
Keep reading to find out.
Autumn statement “winners”
1. Those in receipt of the State Pension will see their income rise
After months of debate, the chancellor made the tough decision to honour a 2019 manifesto promise, the State Pension triple lock.
Put on hold during the pandemic as earnings growth soared, the chancellor’s decision this time round was difficult thanks to rising inflation.
The triple lock, announced by the coalition government back in 2010, enables the State Pension to keep pace with the rising cost of living. It does this by ensuring it rises each year by the higher of:
- 2.5%
- Average wage growth
- The Consumer Price Index (CPI).
Inflation has been rising ever since the UK emerged from coronavirus lockdown in the summer of 2021.
While the Bank of England (BoE) target is just 2%, CPI for September 2022 stood at 10.1%. It is this figure that is used to calculate the State Pension rise.
If you are currently receiving the new full State Pension your payments increase from £185.15 a week (£9,627 a year) to £203.85 a week (£10,600 a year) from April 2023. That’s an increase of more than £900.
2. Anyone looking to move house or buy a first home as Stamp Duty changes remain… for now
One element of Kwasi Kwarteng’s disastrous mini-Budget that will remain in place is the increase in Stamp Duty thresholds.
In September’s “mini-Budget”, Kwasi Kwarteng announced some increases in the thresholds at which Stamp Duty would be payable.
Kwarteng raised the £125,000 threshold to £250,000. The threshold for first-time buyers, meanwhile, rose from £300,000 to £450,000.
Under Kwarteng’s plan, these rises would have been in place indefinitely.
Jeremy Hunt, though, used his autumn statement to confirm that these rises will now end on 31 March 2025.
If you are looking to move house or get onto the property ladder for the first time, these threshold rises will help. You’ll need to weigh them against the rate rises that resulted from lost confidence after the mini-Budget though.
3. Anyone on the national living wage will receive a pay increase from April 2023
If you or a loved one are currently on the national living wage, one announcement from Hunt’s statement will have come as good news.
The chancellor announced the largest-ever rise to the national living wage. Workers aged 23 and over will receive £10.42 an hour from April 2023, an increase of 9.7%.
This change will benefit more than 2 million UK workers who will see their annual earnings rise by around £1,600.
There were plenty of autumn statement “losers” too
1. Those struggling with household energy bills
On the one hand, the announcement in the autumn statement provides clarity.
While the Energy Price Guarantee was originally due to last for two years when Liz truss first announced the measure, it was quickly cut to just six months, with a review to follow in the new year.
Hunt has now confirmed that the Energy Price Guarantee will remain at £2,500 until April 2023 before rising to £3,000. This is the amount an average UK household will pay for their energy, but it’s important to remember that your bill could rise higher if you use above-average levels of gas and electricity.
The change to the cap means that your bills will rise in the spring.
2. Those close to the current Inheritance Tax thresholds
The Inheritance Tax (IHT) nil-rate band has been at its current level since 2009.
In 2021, Rishi Sunak froze the nil-rate band (£325,000) and the residence nil-rate band (£175,000) at their current levels until at least 2026.
Jeremy Hunt has extended the freeze until at least 2028. The measure is designed to claw back additional revenue in IHT as house prices and investments rise, so more people will find themselves exceeding the threshold over the next six years.
3. High earners will be able to earn less before paying Income Tax at 45%
A hairpin turn compared to the previous administration, rather than scrapping the additional rate of Income Tax, Jeremy Hunt has increased the numbers that will pay it.
He has done this by reducing the level at which the 45% rate becomes payable.
If you earn more than £125,140 you will pay more tax from April 2023.
Get in touch
If you’re worried about the effect of the autumn statement on your long-term financial plans, we can help. Please get in touch via email at enquiries@hda-ifa.co.uk or call 01242 514563.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
