The Autumn Statement is a pivotal event that shapes the economic landscape, revealing insights into the government’s stance on spending and fiscal policies. As we anticipate the latest updates, let’s delve into the significant announcements and their potential impact on your finances.
National Insurance Cuts: One standout revelation is the planned reduction in the national insurance rate from 12% to 10%, affecting approximately 27 million workers. This adjustment, effective from January 6, 2024, is poised to save the average worker earning £35,000 annually around £450.
For our self-employed individuals, the proposed abolishment of Class 2 contributions (£3.45 per week) for those earning more than £12,570 is on the horizon. Additionally, a reduction in Class 4 contributions from 9% to 8% on earnings between £12,571 and £50,270 is in the works, promising savings, and simplifications.
UK State Pension Boost: Good news for retirees as the UK state pension is set to rise by an impressive 8.5%. The new state pension will climb to £221.20 per week (approximately £11,502 annually) in April 2024. Those under the old state pension will see an increase to £169.50 per week (around £8,800 a year). This reaffirms the commitment to the triple lock policy.
Pension Reforms: A forward-looking move involves consulting on granting savers “a legal right to require a new employer to pay pension contributions into an existing pension.” These potential reforms could result in an additional £1,000 a year in retirement savings for the average worker who starts saving at 18.
Mortgage Guarantee Scheme Extension: The Mortgage Guarantee Scheme, introduced in 2021 to facilitate home purchases with a 5% deposit, has been extended by 18 months, now closing at the end of June 2025.
ISAs: In a bid to encourage more investment, reforms to the ISA market are on the horizon. From April 2024, savers will have the flexibility to open multiple ISAs of the same type in a tax year without losing their tax-free allowance. This paves the way for access to more competitive rates, although annual ISA allowances will remain frozen in the next tax year. Furthermore, the inclusion of long-term asset funds and open-ended property funds with extended notice periods in an Innovative Finance ISA will be permitted.
As these changes unfold, it’s crucial to stay informed and consider consulting a financial adviser for personalised guidance tailored to your unique circumstances.