BENEFIT claimants and seniors are among the winners in today’s Autumn Statement – but taxpayers and the self-employed will be hit.
Chancellor Jeremy Hunt today revealed a raft of government changes after a disastrous mini-budget by his predecessor in September.
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The aftermath caused mortgage market turmoil and saw the then Prime Minister Liz Truss resign after just over 40 days in the role.
Mr Hunt said during the Autumn Statement: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
“So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.”
Below we round up the winners and losers from the statement.
It comes as Mr Hunt announced:
WINNERS
Pensioners
Millions of seniors will get an £870 rise in state pension payments from April next year thanks to the triple lock staying.
The increase has been made in line with September’s inflation figures of 10.1%.
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The triple lock rule applies to UK state pensions and means pensions must rise each year in line with the highest of three possible figures: inflation, average earnings, or 2.5%.
The full new state pension is currently £185.15 per week, while the full basic state pension is £141.85 per week.
Jeremy Hunt today also announced a second cost of living payment for seniors worth £300.
The £300 payment will specifically go to Brits who are over the state pension age – those born on or before September 25, 1956.
Benefit claimants
Households on benefits including Universal Credit and pension credit will also see their payments rise in line with September’s inflation rate.
The move is set to cost the government £11billion in 2023-24, but will help 10million working age families, Mr Hunt said.
It’ll come into effect in April 2023 and boost the payments for the average family on Universal Credit by £600 a year.
The Chancellor today also confirmed new cost-of-living payments worth £900 for Brits on means-tested benefits, and £150 for households on disability benefits.
In other changes to benefits, 600,000 Universal Credit claimants will be asked to work with a work coach.
Plus, the managed transition of people from employment and support allowance on to Universal Credit will be moved back to 2028.
Energy customers
Energy bills will be capped at £3,000 from April next year.
While this is a rise from the current level of £2,500, it’ll protect households from even higher hikes.
The Energy Price Guarantee applies to 24million customers on standard variable tariffs (SVTs).
It sees the Government limit the price suppliers can charge customers for units of gas, and replaces the price cap set by Ofgem.
Mr Hunt today also announced an extra £6billion for insulation grants and £100 in support for households using heating oil.
Meanwhile, energy companies and generators will be hit with an extra windfall tax.
Workers on minimum wage
The Chancellor today confirmed a 10% hike in the national living wage, which will see the threshold rise from £9.50 to £10.42 an hour.
It’ll begin next April and means more than 2million Brits will get a pay rise.
If you work full-time, this means a yearly £1,600 pay rise.
The national living wage is the minimum amount all employers have to pay staff aged 23 and over.
Those younger than 23 are paid the national minimum wage instead.
These will also rise from April as follows:
- Workers aged 21-22: from £9.18 an hour to £10.18
- Workers aged 18-20: from £6.83 an hour to £7.49
- Workers aged under 18 and apprentices: from £4.81 an hour to £5.28
Smokers
Smokers won’t have to pay more for a pack of cigarettes as Mr Hunt didn’t announce plans to raise rates today.
A hike wasn’t expected as the duty is usually changed in the Spring Budget.
Tobacco duty is a tax charged to companies making or importing cigarettes in the UK.
When the tax is raised, the cost is passed on to consumers who have to pay more for tobacco products in the shops.
Cigarette prices were last hiked in October last year, when 88p was added to the most expensive packs of fags, increasing their cost from £12.73 to just over £13.60.
The cheapest 20 packs jumped by 63p from £9.10 to £9.73.
LOSERS
Taxpayers including higher earners
A freeze on income tax and National Insurance thresholds until 2028 will leave millions of households worse off.
The freeze was meant to come to an end in 2026, but extending this will drag millions more into paying a higher tax rate.
That is because inflation and rising wages will mean more workers will go over the thresholds for paying higher tax.
Thresholds would usually be tweaked to take both of those things into account.
This means someone on the average UK salary of £33,000 will pay almost £2,557 more income tax between now and 2028.
The basic rate of income tax currently kicks in on earnings over £12,571, and the higher rate of 40 per cent at £50,271.
National Insurance is a tax on your earnings and is deducted from your wages each month.
You pay National Insurance if you’re 16 or over and either:
- an employee earning above £242 a week
- self-employed and making a profit of £6,725 or more a year
This sneaky tax is expected to bring in £30billion a year by 2026.
A quarter of a million higher earners will also be stung for more tax after Mr Hunt today dragged them into the 45p rate.
From April, anyone earning more than £125,140 will pay the additional income rate – down from the current threshold of £150,000
The raid on the rich is set to cost 246,000 workers around £580 extra per year as they’re pulled from the 40p to 45p band.
Social housing tenants
Social housing tenants will face rent increases of up to 7% next year.
Mr Hunt revealed there would be an increase in the amount that social rents can be hiked in 2023 – adding up to £340 a year to bills.
Compared to previous plans, which would have seen rents go up 1% above inflation, so around 11%, that’s a roughly £200 saving.
Last year, rents increased by 1.6%.
Many social housing tenants receive full housing benefits from the government, which means the increase in rents will be picked up taxpayers.
However, around 30% of social tenants pay full rents and will be hit by the increase in full because they’re not eligible for support.
That amounts to over 1.3million tenants.
Electric car owners
Electric cars will have to pay road tax from 2025 to put new cars on par with old petrol ones.
The change in Vehicle Excise Duty will help rake in billions more for the Chancellor as more people make the swap to electric cars.
After 2035, no new petrol or diesel cars will be able to be sold in the UK as millions make the eco switch in a bid to go green.
But the move could put people off making a swap from fossil-fuelled vehicles – which are already more expensive for hard-pressed families.
House buyers
The current stamp duty cut will end in March 2025, it was announced today.
It follows a recent cut that means that thousands of homebuyers pay less stamp duty.
Stamp Duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
Ex-Chancellor Kwasi Kwarteng announced the cut to stamp duty in his mini-budget in September in a bid to boost economic growth.
Before the cut, no Stamp Duty was paid on the first £125,000 of any property purchase.
The increase in thresholds at which you pay the tax is saving some buyers thousands of pounds.
Small business and self-employed Brits
Small businesses and self-employed Brits will also be hit with a number of changes in the Autumn Statement.
Firstly, Mr Hunt revealed the dividend allowance will be halved from £2,000 to £1,000 next year.
It’ll then be halved again to £500 from April 2024.
This means millions of taxpayers will start paying taxes sooner, including pensioners, self-employed and business owners who pay themselves in dividends.
You may get a dividend payment if you own shares in a company, and you can earn a certain amount without paying tax.
The dividend allowance has been held at £2,000 in the previous six tax years.
Secondly, Mr Hunt also announced the threshold at which businesses must register to pay VAT will be held at £85,000 until 2026.
This means thousands more small businesses will pay the tax as their turnover increases in line with rising prices.
The threshold was already frozen at 2024, but it has been extended by another two years.
Inheriting households
The rate at which families start paying inheritance tax has been frozen since 2009, and it was today extended by two years until April 2028.
This will force more and more households to pay the tax as house prices and inflation continues to soar.
The threshold currently stands at £325,000 with a further residential nil rate band set at £175,000.
These thresholds can be transferred to a spouse or civil partner giving them an IHT threshold of £1million.
Had the rate kept up with inflation, the starting point where you pay tax would be £460,000 instead of £325,000, according to MCL Accountants.
Between April 2022 and September 2022, the Treasury collected £3.5billion from IHT – £400million more than in the same period last year.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “IHT used to be seen as a wealthy person’s tax, but a mix of booming house prices and threshold freezes mean this is no longer the case.”
Gin and whisky drinkers
Drinkers are still facing the biggest tax hike since the English Civil War as spirits duties are set to rise.
Today’s Autumn Statement documents confirmed that tax on spirits like gin and whisky will go up by 12.6% RPI next Spring.
This will be the biggest rise since the duty was first brought in in 1643.
The increase was first introduced by then-Chancellor Rishi Sunak last year, with today’s statement confirming that it will go ahead.
Retailers are urging Mr Hunt to freeze duties before next April.
