Another Autumn Budget Statement has been made; this time by Chancellor of the Exchequer, Jeremy Hunt. A Budget that should build a stronger and more resilient economy, according to the Chancellor.
National Insurance, tax, savings, pensions and more will be affected. And, as with all budget statements, it will depend on your individual circumstances as to how you will be directly or indirectly affected.
In this article, we will look at some of the key points from the November statement and how they might have an impact on your household once they are introduced.
The main headline from the Autumn Statement was that taxes would be reduced. “The biggest tax cut on work since the 1980s.”
But what does this mean in practice for you and your income?
What Has Happened Since The Last Budget Announcement?
There is some good news since Chancellor, Jeremy Hunt made his last Budget Announcement. Good news that should have benefitted households.
Since the last Announcement, inflation in the UK has fallen significantly from a rate of over 11% down to 4.7%. This rate is also predicted to fall further to 2.8% by 2024.
Depending on your individual circumstances, you might have noticed that this has eased your spending for your everyday purchases, reducing your general cost of living.
The most recent Budget Announcement saw the introduction of some tax cuts. For some of you, if you are a working family, this might benefit you financially, depending on your earnings.
Key Takeaways From Chancellor, Jeremy Hunt’s Budget Announcement
Here are some of the key points from the Budget Announcement.
A Cut In National Insurance Contributions
When we look at our pay packets in the future, lots of employees are going to see a lesser amount taken from their income that goes towards National Insurance contributions. This cut comes into effect from 6th January 2024 so the benefits to your pay packet will be almost immediate.
Previıusly, National Insurance contributions were 12% of your salary. In the future, they will be 10%.
For families with two earners on the average income, the Treasury says this will save £900 over a year. If you are working part time and you work set hours, you will be able to calculate your own savings for the year ahead.
Obviously, this will be more difficult for those of you who work flexible hours that differ from shift to shift or for those of you who work multiple part time jobs.
Are You Self Employed?
If you work on a self employed basis, there is also a cut in your National Insurance contributions which Chancellor, Jeremy Hunt says will be worth £350 a year and will benefit almost 2 million self employed people.
The Chancellor said he will simplify taxes for the self employed by abolishing class 2 National Insurance, saving you £192 on your annual tax bill.
If you make profits over £12,570, your class 4 rate of National Insurance will fall from 9% to 8%.
This gives you the saving of £350 in 2024-25 if you are making the amount the average self-employed person makes; £28,200.
Tax Threshold Freeze
The tax threshold freeze is where critics have said Chancellor Jeremy Hunt is giving with one hand (cutting the amount of money you contribute in National Insurance) and taking with the other.
The money for the Treasury needs to come from somewhere and the tax threshold freeze is going to provide some of that.
At the moment, the freeze on personal tax thresholds will stay in place until 2028. Critics say this will eventually put a squeeze on lower income families – and for many of you who are working part time because you could end up paying tax on wages that you weren’t paying before.
The personal allowance remains at £12,570. Up until this amount, you don’t need to pay personal income tax. As wages rise with inflation, those of you who are working part time could fall into having to pay tax on your income once your salary exceeds £12,570. This is likely to happen for many because that £12,570 allowance won’t increase with inflation.
Critics have labelled this a stealth tax and say workers are actually not much better off than if the Treasury had not introduced the freeze on the tax threshold.
Help With Housing Costs
If you are a renter and you are claiming benefits to help with your housing costs, there was some recognition for you in the Autumn Budget Announcement. This follows lobbying by MPs, councils and campaign groups who said more help was needed for people.
Local Housing Allowance (LHA) has been increased so that it is enough to cover the lowest 30% of rents. The government says this will give 1.6 million households an average of £800 in support next year.
However, if you are waiting for this help with your housing costs, you will need to wait a bit longer as this measure will only come into place in April 2024.
If you are claiming housing benefit, Local Housing Allowance sets the limit that you can claim if you are renting from a private landlord. As the name suggests, this differs between localities. The area you live in and the size of the property you live in determine how much you can claim.
The UK average rent for new tenancies is now £1283 a month so the LHA was no longer covering the cheapest 30% of properties in many neighbourhoods. From April 2024, the cheapest 30% will once more be covered, according to the Chancellor.
Dealing With The Housing Shortage
It is often said there is a housing shortage in the UK. If you are in an area where there is a housing shortage, you might be pleased that the Chancellor has announced plans to make the planning system faster.
Councils will have to make decisions quicker for large developments or face refunding the planning fee to the developer.
In some cases, houses will also be able to be made into two flats as long as the look of the house stays the same.
This should come into effect later in 2024.
One Pension Pot For Life
If you are working part time, the chances are, you have had other roles in the past with different companies and you might have other jobs in the future, too.
Under current rules, when you are employed, your employer must set up a pension scheme for you.
This poses a problem because, as you move from job to job, it means you end up with various pension pots and some of them even get forgotten about.
Chancellor, Jeremy Hunt, would like to see a simplification of this system with a ‘one pension pot for life,’ scheme. This will mean, when you move from one job to another, your pension pot moves with you so that everything is in one place and you know where you are.
Whilst this seems like a great idea in theory, critics say this will cause administrative nightmares for employers. So we will need to wait and see if this is an idea that could come to fruition.
An Increase In The Living Wage
If you are working part time and are earning the Living Wage, you might be pleased to know that the Chancellor announced an increase in the hourly rate.
And great news for the younger people out there. Those entitled to receive the rise in the Living Wage were aged 23 and over. For the first time, that Living Wage rise will now also apply to 21 and 22 year olds.
In April 2023, the Living Wage was increased by just under £1 per hour to £10.42 per hour. That amount will now increase to £11.44 per hour and this will apply from Spring 2044.
For 23 year olds and over, that’s an increase of 9.8%. For 21 and 22 year olds, your hourly wage increase is a big 12.4% jump.
For part time workers, however, bear in mind that that tax threshold allowance hasn’t moved so for some of you on flexible hours, for example, it might pay for you to make sure you don’t work so many hours that you are taken over the threshold.
Benefits To Increase
If you receive Universal Credit or other working age benefits, these will increase in line with September’s inflation rate. That’s an increase of 6.7% from April 2024.
Finding Work
This is always a controversial area and critics will point out the dangers of such policies – people losing benefits through no fault of their own. There are some of you who might benefit from this announcement, however.
The Chancellor was subject to jeers when he announced that people deemed able to work who refuse to seek employment will lose their benefits and extras such as free prescriptions and legal aid.
Work Capability Assessment will be reformed to reflect the availability of home working after the Covid pandemic.
The Chancellor also announced 1.3 billion pounds of funding over the next 5 years to help people with health conditions to find jobs.
There will also be a further 1.3 billion pounds of funding to help people who have been unemployed for over a year to find work.
No Change For Childcare Support
Lots of families have one parent doing part time work because childcare fees are too expensive for both parents to work full time.
In the recent Budget Announcement, there were no changes announced for help with childcare fees despite the publicised rises in cost for accessing and delivering registered childcare.
State Pension Increase
If you or someone in your household is in receipt of their state pension, this will increase by 8.5% from April 2024 in line with average earnings.
Jeremy Hunt declared that this is one of the largest ever increases in the state pension.
Price Increases For The Smokers But Relief For Drinkers
If you smoke and if you like to have a drink on occasion, you probably won’t be surprised to know that there is an increase in prices for your tobacco.
However, if you like to have a weekend drink in the local pubs and clubs or you enjoy a tipple at home, there will be no price increase for your alcoholic beverage of choice.
If you buy hand rolling tobacco, you will have already seen the increase in price. The prices increased by Retail Price Index inflation plus 12%.
Other tobacco products increased by Retail Price Index (RPI) plus 2%.
General Election
It is said that many of the measures announced in the Autumn Budget Statement have been taken with a general election in mind. That this was the last Budget Statement made by Chancellor, Jeremy Hunt before the next general election.
The next time we look at the main points of the Budget statement, we should be post-General Election and it remains to be seen who the Chancellor of the Exchequer will be – and which political party they will be from…