What to expect from the Autumn Statement 2023 – from first-time buyer help to taxes and benefits
CHANCELLOR Jeremy Hunt is getting primed to deliver his Autumn Statement this week.
The Statement will be read in the House of Commons on Wednesday (November 22) at midday.
The annual fiscal event sees the government outline its plans for tax hikes, cuts and things like changes to the minimum wage.
Speaking in the House of Commons, Jeremy Hunt said he plans to deliver an "Autumn Statement for growth" made possible by falling inflation.
Inflation has fallen to its lowest level for two years, dropping to 4.6% in the year to October - down from 6.7% in September.
It means Prime Minister Rishi Sunak has hit his target to halve inflation, a promise he made at the beginning of the year amid the cost of living crisis when the rate hit 10.7%.
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In a major speech on Monday (November 20), Rishi Sunak laid out a blueprint to boost flatlining growth - saying Britain faces a "critical" choice ahead of Wednesday.
His pledges also include reducing debt, shoring up domestic energy supply, backing businesses and delivering a world-class education.
Tory MPs have been clamouring for tax cuts to win back squeezed voters - shouldering the highest-burden since the war - ahead of next year's election.
Answering their pleas he said today: "We will do that carefully, we will do that responsibly, but that time is now here."
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He begged people to trust him on steering the economy "whether you like me or not".
Of course, we won't know exactly what's coming in the Autumn Statement until the day itself, but we've looked at what could be expected.
From the hotly anticipated annual benefit uprating to tax cuts - here's what might come to fruition on Wednesday.
Tax cuts
What is it?
The government extended a freeze on income tax, National Insurance contributions and Inheritance Tax until April 2028 in last year's Autumn Statement.
The freeze was meant to come to an end in 2026, but the extension is set to drag millions more into paying a higher tax rate.
This is because inflation and rising wages will mean workers going over the thresholds for paying higher tax.
Income tax is a tax you pay on your income, but only once you're earning over a certain amount.
Anything earned in a year up to £12,570 is known as your personal allowance and you're not taxed on that.
Beyond that you are taxed a certain percentage depending on the amount you've earned.
If you earn £12,570 or less, you currently pay no income tax.
On earnings between £12,570 and up to £50,270, you pay the basic income tax rate of 20%.
Wages of £50,271 and above are taxed at the higher rate of 40%.
And the additional rate of income tax, which applies to earnings of £125,140 or more, is 45%.
The thresholds for income tax generally rise each year so that people can earn more without paying more tax.
But the thresholds are frozen until 2028, which could drag millions into higher tax brackets.
is a tax on your earnings, which is put into a fund to use for some state benefits.
This includes the state pension, statutory sick pay, maternity leave and unemployment benefits.
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
It is deducted from your wages each month.
There are different types of National Insurance - known as "classes" -, and the type you pay depends on your employment status and how much you earn, and whether you have any gaps in your National Insurance record.
What's expected?
The PM has said the Chancellor would use Wednesday's Autumn Statement to "turn our attention to tax cuts".
But Jeremey Hunt is said to not be considering raising income tax thresholds despite a record tax take.
Instead, any major cuts announced will instead probably offer changes to National Insurance.
The Chancellor is reportedly proposing a cut to Class 4 NI contributions paid by those who are self-employed.
These taxpayers pay 9% on profits between £12,570 and £50,270
2% on profits over £50,270.
But Jeremy Hunt could also raise the threshold at which NI is paid by employees.
Benefits uprating
What is it?
Benefit payments usually rise in line with September's inflation figures from the following April.
The process is known as "uprating".
The UK's rate of inflation stood at 6.7% in September, but there are fears that the government will instead opt to use a lower inflationary figure to uprate welfare payments.
The exact rate at which benefits rise each April is usually confirmed by the chancellor when he delivers his Autumn Statement.
Uprating ensures that payments can keep up with the cost of living like food, clothes and fuel.
What's expected?
Reports have suggested that the government may instead use October's inflation figure to uprate benefits in the spring.
This would mean that Universal Credit payments could rise by 4.6% instead of 6.7%.
Using the October inflation rate would cut working-age benefits spending by about £3 billion in 2024–25, according to research by the Institute for Fiscal Studies (IFS).
The move would affect just under nine million UK households.
For Universal Credit claimants receiving the standard allowance and under the age of 25 - a rise of 4.6% would see payments rise from £292.11 a week to £305.55 a week.
This would see payments across the year increase to £3666.56 - up from £3505.32.
But it would represent a £73.58 real terms pay cut across the year compared to if benefits were to rise in line with the September 6.7% inflation figure as usual.
State pension boost
What is it?
Under the triple lock, the state pension is uprated in April by inflation for the previous September, wages or 2.5%, whichever is higher.
Growth in employees' average total pay was 8.5% in the three months to July.
The UK inflation rate stood at 6.7% in September.
If the government sticks to the triple lock it looks increasingly like state pension payments will rise by 8.5% next April.
What's expected?
Jeremy Hunt will confirm how much state pension payments will rise by in the autumn statement.
There are fears that millions of pensioners could miss out on a £901 cash boost as ministers consider a tweak to the triple lock.
The expected 8.5% increase to pension payments risks being cut to 7.8%.
It would mean pensioners will receive a £826 annual hike in the state pension rather than the expected £901.
However, Rishi Sunak has insisted that he remains committed to the triple lock.
Local housing allowance (LHA) boost
What is it?
Local Housing Allowance (LHA) was introduced in 2008 and calculates the maximum amount people renting from a private landlord can claim in Housing Benefit or Universal Credit.
What you get through the allowance will depend on the area you live in and the size of your rental property.
LHA rates are set for 12 months and change on April 1 each year.
However, the current rate has been frozen since 2020.
Around 844,000 households now have rents above the maximum level that LHA will cover.
What's expected?
It's been reported that Jeremey Hunt is weighing up whether or not to boost this amount.
Homeless charities including Crisis have long called for an increase to the cap.
Any change to the LHA will be confirmed on Wednesday.
Inheritance tax
What is it?
Inheritance tax is paid on the value of someone's estate after a person passes away.
The estate includes things like property, money and possessions.
Any inheritance tax due is calculated on the value of the estate on the date of someone's death and is paid within six months.
There’s normally no inheritance tax to pay if the value of your estate is below the £325,000 threshold.
You can also avoid paying the tax if you leave everything above the threshold to your spouse, civil partner, a charity or a community amateur sports club.
If your estate's value is below the £325,000 limit, you will still need to report it to HMRC.
If you give away your home to your children - including adopted, foster or stepchildren - or grandchildren when you die, your inheritance tax threshold can increase to £500,000. This is called the "main residence" band.
The standard Inheritance Tax rate is 40% - but it is only charged on the part of your estate that’s above the threshold.
What's expected?
It is rumoured that inheritance tax could be cut or even abolished but the latest reports suggest this now won't happen until the Spring Budget of 2024.
Most lifetime gifts escape the tax, so it is mainly a tax on your estate when you die.
However, up to £500,000 of what you leave (up to £1 million for couples who are married or in a civil partnership) can be passed on tax-free.
The exemptions mean less than 4% of deaths result in a charge, but inheritance tax is still deeply unpopular.
Stamp duty cut
What is it?
Stamp duty is the tax you pay when buying a home.
A cut to the housing tax was initially announced in the mini-budget in September 2022.
Before the cut, no Stamp Duty was paid on the first £125,000 of any property purchase.
That's now double at £250,000 for all home purchases.
The threshold at which the duty was paid for first-time buyers was £300,000. But that is now £425,000.
The maximum value of a property on which first-time buyers' relief can be claimed also increased from £500,000 and is now £625,000.
It was later announced that the cut will remain in place until March 31, 2025.
What's expected?
Prime Minister Rishi Sunak and the Chancellor are said considering a partial stamp duty rebate for buyers who improve the energy efficiency of their home within two years of purchase.
There may also be a change to the thresholds or an extension of the existing deadline.
Buyers pay 5% Stamp Duty on property over £250,000, rising to 10% on houses worth £925,000 and 12% over £1.5 million.
It is expected those thresholds would be hiked.
Anyone buying a home could also be given more time to complete their purchase and take advantage of the tax savings.
Again, the latest reports suggest this won't happen until the Spring Budget of 2024.
Business rates and alcohol duty
What is it?
Business rates are a tax that firms such as shops, offices, pubs and factories pay to their local council.
Companies have repeatedly called for an overhaul of the system, complaining that it's outdated and unfair.
Business rates relief is currently 75%, but hospitality experts suggest the pub sector will face a nearly £1billion whack if the Government does not extend current support.
Meanwhile, hated alcohol levies increased by 10.1% on August 1.
This represented the biggest shake-up to duty rates since 1975.
The new system will now tax liquor on its alcoholic strength and consist of six standardised alcohol duty bands.
What's expected?
Hospitality UK says one in ten boozers could go out of business if the Chancellor fails to extend business rates relief in his Autumn Statement.
The Sun launched the Save Our Sups campaign to protect the great British boozer.
The rate of closures now means there are fewer than 100,000 pubs across the UK.
UK Hospitality reckons freezing business rates relief will save the sector £630million and spare it an inflation-linked rise costing a further £230million.
Fuel duty changes
What is it?
Fuel duty is a tax on fuel including petrol, diesel, biodiesel and bioethanol.
VAT (Value Added Tax) is also charged on most fuel.
The Sun's Keep it Down campaign has forced ministers to freeze duties for 13 years in a row.
What's expected?
It is likely that drivers will be saved from more petrol price rises as there are no changes for fuel duty expected in the autumn statement.
Meanwhile, Rishi Sunak has unveiled his five-point plan to boost Britain's growth including tax cuts – check how you will be affected.
ISA overhaul
What is it?
An individual savings account (ISA) is a type of tax-free savings account.
Savers don't pay tax on any savings interest earned.
The most common types are cash ISAs and stocks and shares ISAs, where your money is invested in the stock market.
Each year, everyone over the age of 16 gets an ISA allowance of £20,000.
This means that they can earn interest on their savings in a bank, building society or another financial provider, without paying tax.
The maximum amount you can put away for the 2022/23 tax year is £20,000.
There is no limit to the number of ISAs you can have, but you can only pay into one of each type in a single tax year.
Those saving into a conventional savings account are still protected from tax to a certain level too.
The personal savings allowance lets you earn a chunk of interest before paying tax.
Basic rate taxpayers get £1,000 and higher rate taxpayers get £500.
But if you expect to make more than £1,000 a year in interest you'd be better off by saving your cash in an ISA.
What's expected?
The Chancellor is said to considering a change to ISA rules next year so that people can pay money into more than one ISA of each type in a tax year.
This would mean savers could open multiple new ISAs as new deals become available.
AJ Bell head of retirement policy, Tom Selby said: "This would be a helpful change but, far more importantly, it potentially paves the way for radical reform of the ISA system to make it much more flexible and customer friendly."
A change to Lifetime ISA (Lisa) rules could also be on the cards.
You can only withdraw money from a Lisa if you're buying your first home, you're aged 60 or over, or you're terminally ill with less than 12 months to live.
Take cash out for any other reason and you'll be slapped with a 25% on the amount taken out.
During the pandemic, the government reduced the withdrawal charge to 20%, to lessen the blow for people needing to access their cash.
Laura Suter, head of personal finance at AJ Bell said Mr Hunt could introduce a similar policy to help people during the current cost of living crisis.
She added: "Reducing the exit fee would be a low-cost move for the government that would help first-time buyers who saved into their Lifetime ISA in good faith but, due to soaring inflation, now need to dip into their savings."
Help for first-time buyers
What is it?
There are a number of schemes to help first-time buyers already - but there could be more on its way.
If you are unable to save the deposit needed to buy a home or can’t afford the mortgage payments, shared ownership could be worth a closer look.
The government-backed scheme allows people to buy a portion of a property and pay rent to a landlord on the rest.
First-time buyers can bag a home with a discount of up to 50% using this government scheme.
The home's discount will stay with the property forever and you won't be able to cash in on the savings when it comes to selling.
To access the scheme, you will need to have a deposit worth at least 5% of the discounted purchase price and earn less than £80,000 a year or £90,000 in London.
Local councils may also add further rules such as a local connection or reserving the properties for key workers only.
Meanwhile, Lifetime ISAs can be opened by anyone aged 18 to 39.
When you open a Lifetime ISA the government will add 25% to your savings, up to a maximum of £1,000 a year.
That means if you put in £4,000 a year you'll get a £1,000 free cash bonus to put towards your first home.
What's expected?
Jeremy Hunt is said to be mulling over a package of support to help first-time buyers get on the property ladder.
One of the options said to be being considered is an extension to the government's mortgage guarantee scheme.
It allows buyers with a small deposit of 5% to get a 95% loan-to-value (LTV) mortgage.
The initiative was originally due to finish at the end of 2022, but it is now set to come to an end on December 31, 2023.
The Treasury is also said to be considering a new type of individual savings account (ISA), targeted at people looking to get a deposit together.
Council tax hikes
What is it?
Council tax pays for local services such as schools, rubbish and recycling collection and street repairs.
The costs can vary dramatically between councils, but bills have generally increased for all areas over the last few years.
Local authorities don't usually decide how much they'll increase their rates by until the new year.
What's expected?
The government is being urged to help councils fill a funding gap of £4billion over the next two years, according to The Local Government Association (LGA).
Council Tax rises every year, but there are fears that households may see council tax hikes as a means of filling this financial hole.
Under new plans drawn up by the Treasury, local authorities may be able to put up bills by a maximum of 5% next year.
It would mean average family homeowners in Band D could be charged more than £2,000 in council tax from April.
Cost of living payments
What is it?
Millions of households have received cash support from the government over the last 18 months in the form of cost of living payments.
This financial year, the cash is worth up to £1,350 in total.
Payments landed in accounts this spring and summer, but more are coming.
In total, £900 is being handed out to each household on means-tested benefits in three instalments.
A £150 cost of living payment has also been given to eligible people with certain disabilities.
Plus, a £300 pensioner payment will follow later this year.
What's expected?
Hard-up households will be wondering if any more cost of living payments are in the pipeline.
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There has been no word on whether more cash support is on the way yet.
However, if more support is in the pipeline, we'd be surprised if it isn't covered in the Chancellor's Statement.
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