Chancellor Jeremy Hunt has released the details of the government’s financial plans in the Autumn Statement for 2023. With the cost of living crisis affecting so many households, these plans focus on ways to help those who are struggling as well as to boost economic growth. Inflation has now halved to 4.6% as promised, with a reduction to 2.8% expected by the end of 2024.
The announcement included 110 measures to be implemented and these plans include reducing debt, cutting taxes and rewarding effort and work. Here, we’ve provided a summary of these financial plans so that can you see at a glance how they might affect you.
Local Housing Allowance
For private renters, rent comprises over half of the living costs for those with lower incomes. As such, the freeze has been lifted on the Local Housing Allowance and it has been increased to the 30th percentile of local market rents. This will give significant financial support to over 1.6 million households next year.
There was speculation that the increase in benefits would be based on October’s lower inflation rate of 4.6% but it has been confirmed that September’s inflation rate of 6.7% will be used. This increase affects those receiving working-age benefits, such as Universal Credit, and disability benefits.
The pension triple lock
The government’s commitment to the pension triple lock has been honoured in full. From April next year, an 8.5% increase to the full state pension will take effect. This will increase it to £221.20 a week.
Pot for life pension reforms
Currently, workers are automatically enrolled in their employers’ pension schemes. Now, however, a pot for life scheme will be introduced. As an employee, this will allow you to choose your preferred pension scheme to save into. This means your employer must pay into your existing pension rather than their pension scheme.
If you regularly change jobs and have, therefore, paid into several employers’ schemes, this will have negatively affected your pension savings. Having one pot for life pension, however, could unlock an extra £1,000 per year in retirement for the average earner who has saved since they were 18.
Funding of £50m for apprenticeships over the next 2 years will be provided. This is to increase apprenticeships in engineering as well as other key growth sectors.
The planning system will be reformed to ensure that applications are processed faster. In return for meeting guaranteed faster timelines, local authorities will be able to cover the costs of major business planning applications. Failure to do so will result in the fees being refunded and the application being processed free of charge.
In recognition of the contribution made to the economy by those who are self-employed, a reform and simplification to their taxes will take effect. Class 2 National Insurance, which is usually a compulsory charge of £3.45 per week, will be abolished for those earning more than £12,570. Access to entitlements and credits will remain in full.
Also, Class 4 National Insurance paid at 9% on earnings between £12,570 and £50,270 will be cut by 1%. This means that Class 4 NI will be reduced to 8% from April.
The main employee rate of NI will be cut from 12% to 10%. Rather than waiting until the new tax year in April, urgent legislation is being brought in to put this into effect from 6th January.
Business investment tax
Full expensing, which is currently set to run until the end of March 2026, will now be made permanent. This scheme enables companies to claim 100% capital allowances on plant and machinery investments. Companies can claim 25p back from every £1 invested. This boosts economic growth by making the purchasing of equipment and the building of factories cheaper, for example.
A freeze on the way business rates are calculated has been set for an extra year. A 75% discount on these rates for the hospitality, retail and leisure sectors has also been extended for another year.
Back to Work Plan
A clampdown will begin on those claiming benefits without working. There are currently 7 million adults not working in the UK despite there being 1 million job vacancies. The Back to Work Plan encourages people to get back to work with various types of employment support.
If a claimant hasn’t found employment after looking for 18 months, a mandatory work placement will be given. If a claimant doesn’t engage with the work search process for 6 months, their case will be closed and their benefits stopped.
Different aspects will also be focused on under the plan, such as treatments rather than time off, the possibility of working from home, help given to those with health conditions when trying to find jobs as well as treatment and employment support for those with mental health conditions.
National Living Wage
The National Living Wage is to be increased from £10.42 to £11.44 per hour. This 9.8% increase will take effect in April next year.
£110m will be provided over the next 2 years to build more homes. £32m has also been pledged to tackle the planning backlog and develop housing in London, Cambridge and Leeds. £450m will also be allocated to the Local Authority Housing Fund (LAHF) to deliver 2,400 new homes.
A consultation will be given on new permitted development rights. This would allow any house to be converted into two flats, provided that the exterior remains the same.
To combat rising antisemitism in the UK, up to £7m of funding will be provided over the next 3 years to organisations, such as the Holocaust Education Trust. This will ensure that antisemitism is tackled in schools and universities.
Alcohol and tobacco duty
A freeze has been placed on all alcohol duty until 1st August 2024. The duty on hand-rolling tobacco has been increased by 10% over the tobacco duty escalator.
Benefit from the announcements made in the Autumn Statement 2023
To discuss how the announcements that have been highlighted in the Autumn Statement 2023 could affect your property plans, such as affordability for a mortgage or your plans for property development, give us a call on 01322 907 000. Our expert mortgage brokers are here to discuss your situation and provide you with impartial advice, finding the best financial solution for you.