On 17 November, Chancellor Jeremy Hunt addressed the House of Commons to reveal the details of his Autumn Statement. His plans are meant to tackle rising prices and regain some credibility with international markets that had been lost recently, with tax rises and spending cuts with billions of pounds.
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While many people might not reap as many benefits as others, the chancellor insists that the country’s most vulnerable people will be protected as the government battles to mend the economy.
Read on for some key takeaways from the Autumn Statement and how they might affect you.
Taxation and wages
Once your earnings have surpassed your personal allowance threshold of £12,570, you will be charged income tax at the basic rate of 20%. On earnings over £50,270 a year, you will pay 40% tax and the additional rate will kick in with earnings over £125,140. Personal allowance and the basic rate tax band have already been frozen, but the statement extended that freeze an additional two years to 2028. This means that if you get a pay rise, you could be at risk of entering a higher tax bracket, and at the very least, more of your income will be subject to tax. National Insurance and higher rate thresholds will also be frozen until April 2028.
Some other highlights include:
- Minimum wage increase for people over 23 from £9.50 to £10.42 an hour from next April
- State pension payments and means-tested and disability benefits will increase by 10.1%, in line with inflation
- Tax-free allowances for dividend and capital gains tax also due to be cut next year and in 2024
- Your local council will be able to raise your council tax up to 5% without a local vote, up from the current 3%
Economy and public finances
Due to the fact that the economy has slowed for two consecutive quarters, we are now officially in a recession, according to the Office for Budget Responsibility (OBR). Rightly, much of the public’s focus lately has been on the cost of living crisis and the sky-rocketing rate of inflation, which is currently sitting at 11.1%. While the OBR has predicted growth of 4.2% overall for this year, they say that the size of the economy will shrink by 1.4% next year. By 2024, the unemployment rate is expected to hit 4.9%.
There is some good news on the horizon, though, the OBR predicts that inflation will fall to 7.4% in 2023. After previously allotting three years to hit debt and spending targets, the government is now allowing itself five years. It’s important to note that a drop in the inflation rate does not mean that prices in the shops will be going down. All it means is that the rate at which prices will rise will be slower than before.
When in doubt, reach out
If you’re unsure how your finances will be affected by everything announced in the Autumn Statement, be sure to get in touch with your trusted financial adviser. The experts at Dental & Medical Financial Services are here to help you revise or adjust any parts of your financial plan that might be impacted by the announced changes. Reach out today to get started.