Autumn Statement 2023: What changes are likely to be announced?

The government recently announced that chancellor Jeremy Hunt will deliver his Autumn Statement on 22 November 2023.

In this address, he will update MPs and the rest of the country about the current state of the economy. He will also outline the government’s plans for tax and public spending, as well as any potential changes to legislation.

Many of these announcements could affect your own financial plan, so it is important to be aware of any changes. While you will have to wait until 22 November to find out exactly what the chancellor will announce, there are certain issues he is likely to address.

Read on to learn what to expect from the upcoming Autumn Statement.

Tax cuts are “virtually impossible” in the Autumn Statement

When he was chancellor in 2021, Rishi Sunak announced that the Personal Allowance would be frozen until 2026. In the Spring Budget, Jeremy Hunt extended this freeze until 2028.

As a result, you may be likely to pay more Income Tax in the near future. Additionally, the Capital Gains Tax (CGT) Annual Exempt Amount reduced to £6,000 and it is due to halve again to £3,000 in April 2024.

The government also cut the Dividend Allowance to £1,000, with plans to reduce it further to £500 in April 2024.

Consequently, many people could pay more tax and the chancellor is under pressure to announce tax cuts in the Autumn Statement. However, in a recent interview on LBC, he said that this would be “virtually impossible.”

Hunt explained that, until the government can bring down the national debt and get inflation under control, they were unlikely to introduce tax cuts.

As a result, you may need to prepare for a potential increase in your tax bill and consider more tax-efficient ways to hold your wealth, such as an ISA or pension, for instance.

There is a “live discussion” about Inheritance Tax reforms at the highest level of government

While Jeremy Hunt publicly stated that he was unlikely to announce any tax cuts in the Autumn Statement, there are rumours about potential changes to Inheritance Tax (IHT).

According to the Guardian, three sources confirmed that there are “live discussions” about IHT reforms at the highest level of government. However, the official position of No 10 is that the tax will not be abolished.

While he may not announce the complete abolition of IHT, Hunt could potentially implement some changes to the rate of tax or the nil-rate bands. Either way, the Autumn Statement could hopefully bring more clarity on IHT moving forward.

You may need to be aware of how potential changes to IHT could affect your estate plan, so you can make any necessary adjustments.

The outlook for the State Pension triple lock is positive but questions still remain

The State Pension triple lock is one of the biggest question marks leading up to the Autumn Statement.

The triple lock is designed to ensure that the State Pension does not lose value in real terms as the cost of living grows.

To achieve this, the State Pension normally rises in line with the highest of these three measures:

  • 5%
  • Average wage growth between May and July compared with the same period the previous year
  • Inflation measured by the Consumer Prices Index (CPI) in the 12 months to September of that year.

Typically, any increase to the State Pension is announced in November and then implemented on 6 April the following year.

However, in the 2022/23 tax year, the average wage growth aspect of the triple lock was temporarily removed because wages jumped considerably after the Covid-19 pandemic. While the government reinstated the full triple lock in the 2023/24 tax year, there has been discussion about suspending it again.

According to the Guardian, Treasury officials estimated that they could save up to £1 billion by taking a break from the triple lock to prevent an 8.5% increase in the State Pension next year.

The government reassured the public that they are “committed” to maintaining the triple lock, but they have not confirmed how much the State Pension will increase by. Consequently, there is still a chance that the Autumn Statement will include some changes to the State Pension amount.

While the State Pension may not provide your main source of income in retirement, it can still be a useful supplement. However, you may not receive as much as you initially thought if changes to the triple lock come into effect.

Welcome changes to the ISA landscape could be on the way

An ISA is an effective vehicle for saving and investing tax-efficiently, but they are often criticised for being too complicated.

Consumers believe that there are too many different products on the market, and this may disincentivise savers who don’t know which ISA is suitable for them.

Fortunately, the Financial Times reports that the Treasury has been in talks with industry executives about a potential overhaul of the ISA landscape. This could mean that the chancellor may announce some changes in the Autumn Statement.

One of the potential changes is enabling cash savings and investments to be held in a single ISA. Some executives have also suggested a separate ISA allowance reserved for investing in UK companies.

While the exact changes are not yet clear, the Treasury has expressed a desire to make it easier to use ISAs and provide more benefits to incentivise savers. As such, any changes announced in the Autumn Statement may be more likely to be positive.

Changes to the living wage and benefit sanctions have already been announced

Jeremy Hunt used his speech at the Conservative Party conference on 2 October to announce some measures that he is likely to expand on in his Autumn Statement.

Firstly, the “national living wage” for those aged over 23 will increase from £10.42 an hour to at least £11 an hour. The chancellor is expected to provide clarity about exactly how much the increase will be, and when it will come into effect.

Hunt also announced tougher sanctions on benefits claimants who refuse to take active steps to find work. The Autumn Statement is likely to include more details on exactly what these changes will look like.

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If you need help navigating any changes announced in the upcoming Autumn Statement, we are here to help.

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Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.



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