The long-awaited Autumn Statement is here. Naturally, it’s been controversial, but it is on another planet to the ‘mini-budget’ announced by Liz Truss only two months ago. In fact, these announcements make Jeremy Hunt look like a socialist on the surface (relatively speaking).

However, while some of the measures look positive at first glance, many of the benefits of said measures are countered (and then some) by so-called ‘stealth taxes’. Not to mention the fact that much of the spending announced brings us back to 2010 levels at best… Not ideal.

So, what policies have been announced in this Autumn Statement and what does it all mean for you? Let’s take a closer look.

NOTE: These announcements are for England only, and may differ in Scotland, Wales and Northern Island.

NOTE 2: The changes made regarding businesses are not included below. I wanted to focus this more around the consumer. If you’d like me to include these changes, let me know in the comments or via Social Media and I’ll edit them in.

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Wages, Benefits and Pensions

National Living (& Minimum) Wage

From 1st April 2023, the national living wage for those over 23 years old, along with the minimum wage for those under 23 years old, will increase.

The new rates will be:

• Workers aged 23 and over: A 9.7% increase, from £9.50 per hour to £10.42 per hour
  • For a worker on the NLW doing 35 hours per week on average, this will result in an extra £1,674 per year (before tax)
• Workers aged 21 to 22: A 10.9% increase from £9.18 per hour, to £10.18 per hour
  • For a worker on the NMW doing 35 hours per week on average, this will result in an extra £1,820 per year (before tax)
• Workers aged 18 to 20: A 9.7% increase from £6.83 per hour to £7.49 per hour
  • For a worker on the NMW doing 35 hours per week on average, this will result in an extra £1,201 per year (before tax)
• Workers aged 17 and under (and Apprentices): A 9.8% increase from £4.81 per hour to £5.28 per hour
  • For a worker on the NMW doing 35 hours per week on average, this will result in an extra £855 per year (before tax)

Benefits

After months of pressure to raise benefits in line with inflation, the government has finally guaranteed that this will in fact occur.

• For the financial year 2023/2024 (i.e., from April), inflation-linked benefits and tax credits will increase by 10.1%, the same as September’s inflation reading
  • This increase applies to benefits such as: Universal Credit, Personal independence payment (PIP), Disability Living Allowance (DLA), Attendance Allowance, Incapacity Benefit, Severe disablement Allowance, Carer’s Allowance, Child Benefit, Statutory Maternity/Paternity Pay, Working Tax Credit and Child Tax Credit
• The Benefits Cap (the maximum amount you’re allowed to receive in benefits overall) will also rise by 10.1%. Rising from £384.62 per week to £423.45 per week for a couple or single parent, or from £257.69 a week to £283.72 for a single adult

State Pensions

Despite expectations that the ‘triple lock’ will not return during the Autumn Statement, the government did in fact guarantee that the triple lock will be enforced for the financial year 2023/2024 (i.e., from April). This makes sense, as the majority of pensioners are Conservative voters. It would be political suicide to cut their income in real terms.

• The triple lock has been reinstated (i.e., the state pension will increase by either 2.5%, by the same as the average wage growth, or by the inflation rate announced for September, whichever is higher)
• As such, the state pension will increase by 10.1% in the next financial year
  • If you reached the state pension age (and receive it in full) before 2016, you’ll receive £14.33 per week more. This increases the weekly amount from £141.85 per week to £156.18 per week
  • If you reached the state pension age after 2016 (and receive it in full), you’ll receive £18.70 per week more. This increases the weekly amount from £185.15 per week to £203.85 per week

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Taxes & Allowances

Income Tax & Personal Allowance

While there was only a small change to the income tax bands themselves in this Autumn Statement, there will also be a freeze on the thresholds for several years. This freeze is where the ‘stealth tax’ comes in.

• From April 2023, the 45% “additional rate” of income tax will have its threshold reduced. This will reduce from those earning over £150,000 per year, to those earning £125,140.
  • For someone earning exactly £150,000 per year, this means an extra tax cost of £1,243 per year (less than 1% of income)
• The personal allowance (the amount you can earn before paying any income tax) will remain frozen at £12,570 until April 2028
  • This means that, as wages (and costs) increases over the next 6 years, the more tax you will pay. Even those currently earning under £12,570 will likely find they earn over this amount in 6 years due to natural wage increases
• On top of this, the tax thresholds for each tax band will be frozen until April 2028
  • Similar to the point above, for those currently earning just under £50,270 (the threshold for the higher rate of tax) may find themselves earning more than this in 6 years’ time purely due to natural yearly wage increases, paying 40% in tax on some of their income
  • The practice of freezing these rates for multiple years brings in more revenue for the government, and is known as ‘fiscal drag’
• The thresholds for National Insurance (the amount you can earn before paying any NI) will also be frozen until 2028

Council Tax

A small change has been made to council tax, arguably another ‘stealth tax’.

• Council tax increases are usually limited to a maximum of 3% per year (except in a few specific cases). This will increase to 5% in April 2023, meaning households are likely to pay more

Dividend Tax Allowance

It’s not just the working class hit this time around. Investors who earn dividends (outside of an ISA) will also see a (very small) cut in their income.

• The annual dividend allowance will fall from £2,000 to £1,000 from April 2023
• This allowance will then fall again to £500 from April 2024

Capital Gains Tax Allowance

A more significant income cut will be introduced for investors (with stocks outside of an ISA). This cut will also affect those with reselling side-hustles, and those selling a valuable personal item or a second home. This will be via a reduction in the capital gains tax allowance.

Capital gains tax is taken from the profit made from such sales.

• The capital gains tax allowance will fall from £12,000 to £6,000 from April 2023
• This allowance will then fall again to just £3,000 from April 2024

Stamp Duty

The stamp duty cuts announced by Liz Truss only a few weeks ago, will be reversed in April 2025. This means that, from April 2025:

• First-time buyers won’t pay any stamp duty on the first £300,000 of a main residential purchase (currently £425,000)
• Other homebuyers won’t pay stamp duty on the first £125,000 of a main residential purchase (currently £250,000)

Road Tax

From April 2025, fully electric vehicles will be charged road tax (called excise duty). Little information has been given on this, but currently electric vehicles are tax-free.

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Cost of Living

Energy and the Energy Price Guarantee

The ‘energy price guarantee’ will now continue after April 2023. Though, the support will be scaled back. This support was originally due to end after 6 months.

• The current price cap suggests that the typical UK household will be charged around £2,500 per year. This will rise to £3,000 from April 2023 (individual unit rates not yet announced)
  • Note that this is only an average and not an absolute cap. If you use more energy, you’ll pay more
  • Without this support, it’s estimated that the average energy bill would be around £3,740 per year
• For those using heating oil and LPG, the ‘alternative fuel payment’ support will rise from £100 to £200

Cost of Living Payments

Additional cost of living payments have been announced. These are:

• An additional £900 for those on means-tested benefits, split into multiple payments (dates and amounts not yet confirmed)
  • You’ll be eligible if you receive: Universal Credit, Child or Working Tax Credits, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support or Pension Credit
• An additional £300 for pensioners to assist with bills in 2023/2024, the same as they’ve received this year
• An additional £150 for those on disability benefits
  • You’ll be eligible if you receive: Disability Living Allowance (DLA), Personal Independence Payment (PIP), Constant Attendance Allowance, Scottish Disability Benefits or War Pension Mobility Supplement

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Public Spending

The Autumn Statement also included some additional spending for the NHS, Social Care and Education sectors. I’ll give some basic details on this rather than going into the nitty gritty. I want this post to be more about you as an individual.

The important thing to note is that, despite this spending increase, the schools’ budget, for example, will only be returning to 2010 levels on a per-pupil basis,. This is despite current economic pressures, increased energy prices and higher wages.

Here’s what was announced:

• The core school budget will increase by £2.3bn per year, bringing this budget back to 2010 levels
• The NHS will receive an additional £3.3bn per year, a real term cut when taking inflation into account
• The adult social care system will receive up to an additional £4.7bn per year by 2024/2025, including £1bn specifically to support hospital discharges to free up beds
• The government will continue to support major infrastructure projects, such as HS2 and the Sizewell C nuclear power station
• From 2024/2025 until 2027/2028, government department budgets will increase by 1% per year, meaning real term cuts when taking inflation into account (assuming inflation is above 1% for those years)

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What Was Missing?

Here are a few things that opposition parties have been calling for. Unfortunately, they were not present within the Autumn Statement despite being reasonable ways to bring in additional revenue:

• Removing ‘non-dom’ status, whereby wealthy individuals who are not UK nationals are exempt from paying tax despite living in and receiving an income in the UK. It’s believed that removing this status, even with a fraction of those people leaving the UK, could increase tax revenue by around £3bn per year
• Removing charitable status from private schools and/or adding a VAT charge to fees
• Enforcing a more robust windfall tax on energy companies and removing the current tax breaks for ‘investing’ their profits in the UK, resulting in companies like Shell paying £0 in windfall tax. The majority of the projects used to claim tax relief were already planned prior to the policy, giving energy companies a ‘free pass’ on the tax despite enormous profits

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I’d love to hear people’s opinions on this year’s Autumn Statement. Let me know your thoughts in the comments!