Acting on the Autumn Statement

Recently the UK Government brought out its Autumn Statement: a plan designed to – in theory – help tackle the burden of the cost of living. But will it really lift the cloudy skies or be the harbinger of recession?

Stick around to find out, because as you look to build a better world, it’s crucial to understand the motion of your money.

So what can you expect the Autumn Statement to mean for your finances and your pension?

Income Tax

One of the biggest announcements in the Autumn Statement came in the form of income tax. Instead of the tax brackets increasing in line with inflation, which is at records levels, income tax brackets have been frozen. This means that a pay rise or change to your income levels could put you in a higher tax bracket.

Did you know that you pay income tax on your pension too?

These are the levels of income tax announced in the Autumn Statement:

Personal Allowance

0% on the first £12,570 earned. This has been frozen until 2028. You won’t pay any tax on the first £12,570 of your salary. This is called your Personal Allowance. Remember the personal allowance is reduced by £1 for every £2 earned between £100,000 and £125,140.

Basic Rate

20% income tax paid on £12,571 to £50,270. This too has been frozen until 2028. That means you’ll pay income tax at 20%.

Higher Rate

40% income tax. This bracket has been changed, meaning that if you earn between £50,271 and £125,140, you will pay 40% income tax. The change was to lower the upper bracket from £150,000 to £125,140.

Additional Rate

45% income tax if you earn over £125,140. This has been lowered from £150,000.

Energy Price Guarantee

You may have heard, or even benefitted from, the current Energy Price Guarantee. It’s a scheme designed to keep your bills down by limiting the price per unit of energy used.

It doesn’t cap the overall price of your bill though.

The Energy Price Guarantee was due to expire in April, and if it did, bills could have soared by thousands of pounds a year. In the Autumn Statement, Chancellor Jeremy Hunt announced that the Guarantee will be extended by another 12 months, but will not be as kind to your bank account. From April, the typical household bill will be limited to £3000 – a rise of £500.

State Pension

This issue has dominated headlines recently – with the now-expunged mini-budget causing major triple-lock confusion.

In the Autumn Statement, Jeremy Hunt confirmed that the State Pension would rise in line with inflation (10.1%). This means that the triple-lock (a scheme to guarantee that the State Pension increases with either inflation, average wage increase, or 2.5%), remains implemented as intended.

As a result of Hunt’s pension confirmation, the new State Pension will rise from £185.15 per week to £203.85.

Make sure you’re set for retirement by checking your State Pension valuation here.

Stamp Duty Announcement

The Chancellor also announced a deadline to the Stamp Duty cut: a tax paid when purchasing property.

In September, the price at which this tax is paid was increased from £125,000 to £250,000. For first-time buyers, stamp duty is only paid on properties over £425,000. First-time buyers also benefit from a discount on Stamp Duty on properties up to £625,000, which itself is also an increase.

However, the Autumn Budget announced that these Stamp Duty changes will revert to pre-September levels in March 2025.

And that’s the Autumn Statement in a nutshell.

Remember to check up on your financial wellbeing with some of our articles across the IMI News site, or get stuck in with visualising your future with our pension planning tools: Architect and Snapshot.

Check out this handy guide to get your Geek on!