Let’s look at what the changes under Jeremy Hunt’s Autumn Statement mean for you.
National Insurance
Hunt announced that the National Insurance rate will be cut from 12% to 10% from 6th January 2024. This means savings for those earning over £242 a week who are below the State Pension age.
From April 2024, those who are self employed earning profits above £12,570 will no longer have to pay Class 2 National Insurance contributions. The rate of Class 4 National Insurance contributions has also been cut by 1%.
However, the freeze on income tax thresholds, including that of Personal Allowance at £12,570, remains until 2028. This means that lower earners will still be worse off as time goes on, as more and more will be dragged into paying the basic rate of tax. So, despite this lowering of National Insurance rates, many will still be paying more tax than they would if these tax thresholds had never been frozen.
Minimum Wage
Minimum Wage is set to increase from the new tax year in April 2024, with the age bracket for the National Living Wage being brought down from 23 to 21.
Out of Work Benefits
Hunt has promised a 6.7% increase for working aged benefits from the next tax year, which includes Universal Credit, Jobseeker’s Allowance, Employment and Support Allowance and other disability and sickness benefits.
Rules around claiming out of work benefits will be stricter, with people expected to stay fully engaged in their search for work. Those who fail to find work after 18 months of “intensive support” will be given mandatory work placements. Anyone who doesn’t look for work for a six-month period will risk losing their benefits.
Local Housing Allowance
From April 2024, Local Housing Allowance will be restored to the 30th percentile of current rental values, whereas it had previously been frozen against 2020 rental values. This means it is now enough to cover the lowest 30% of rents.
Pensions
As well as announcements to increase the State Pension by 8.5% in April, Hunt also introduced a proposal designed to give British workers one pension pot for life by 2030. This would mean that if you changed jobs, you would have the legal right to have your contributions paid into an existing scheme rather than the company’s own pension arrangement.
However, this would likely be very difficult to establish, and there are concerns over individuals being able to pick the best pension for their needs.