Which? Money Podcast
Join us on our weekly audio show for the latest money news and personal finance hacks to help make you better off.
Listen nowAutumn Statement 2022: what could it mean for your money?
Find out how Chancellor Jeremy Hunt's announcements will affect you
Chancellor Jeremy Hunt's Autumn Statement included a mix of tax threshold freezes, cuts to allowances, and details about the government's energy support plans.
The Chancellor had already warned of 'difficult decisions' in the lead up to his announcement, as the government seeks to correct surging inflation, fill a hole in UK finances and navigate a forthcoming recession. This will come from a mix of spending cuts and increased income from taxes.
Here, we take a closer look at what was included in the Autumn Statement, and how it will affect people’s pockets.
Future energy support plans
Hunt previously said the Energy Price Guarantee (EPG), which was introduced by Liz Truss and caps the average annual household bill at £2,500, would end in April 2023. An updated version of the EPG will run for a year from April 2023, freezing energy bills for a household with an average or 'typical' energy use at £3,000 per year.
Vulnerable households will also receive further cost of living payments next year - £900 for households on means-tested benefits, £300 for pensioners, and £150 for individuals on disability benefit.
The government is also extending the Household Support Fund scheme by 12 months. It was set up to help councils assist those who might otherwise fall through the cracks.
Freeze to income tax thresholds extended
The freeze on the personal allowance, and thresholds for income tax and National Insurance will be extended to April 2028. The freeze on these taxes had been due to lift in 2025-26.
With thresholds failing to rise in line with salaries, a significant number of people may end up in a higher tax band by the end of this period.
The inheritance tax (IHT) threshold has also been frozen. The 'nil-rate band' – the amount that can be passed on before IHT is due at a rate of 40% – will stay at its current rate of £325,000 until April 2028.
Hunt says, even with this freeze, 'we’ll still have the most generous set of tax free allowances of any G7 country'.
Additional-rate tax threshold reduced
The additional-rate income tax threshold will reduce from £150,000 to £125,140 from April 2023. It's estimated around 250,000 taxpayers will be pushed into this higher tax band, paying 45% on any income above the new limit.
The Chancellor said this would mean anyone earning £150,000 or more could expect to pay £1,200 more per year in income tax.
- Find out more: Chancellor announces major income tax changes
State pension triple lock reinstated
Following considerable speculation about how much state pension payments would rise by in 2023-24, the Chancellor confirmed pensioners would receive a 10.1% increase, in line September's inflation - a formula outlined in the state pension triple-lock guarantee.
This was first introduced in 2010 by the Conservative-Liberal Democrat coalition government and means that payments are increased each year by whichever rate is the highest of either average earnings, the Consumer Prices Index (CPI) inflation, or 2.5%.
This means the state pension will be worth in excess of £10,000 for some people next year.
In addition, those claiming working-age benefits (such as Universal Credit) and pension credit will see payments increase by 10.1%.
The pension credit standard minimum guarantee for 2023-24 will be £201.05 for a single person, and £306.85 for a couple.
- Find out more: state pension to increase by record 10.1%
Possible council tax bill hikes
The Chancellor announced that he wanted to provide 'greater flexibility' to local authorities for setting council tax. Currently, local authorities can only raise council tax by up to 2.99% without the need to hold a local referendum. Next year, this is set to increase to 3%, with an additional 2% if they qualify for the social care precept.
This means your council tax bill could increase by 5% next year, without the rise going to a local referendum, which could pave the way to bigger increases to bills.
Find out more: paying council tax
Cuts to dividend tax and capital gains tax allowances
The dividend allowance will be cut from £2,000 to £1,000 next year, and then to £500 in April 2024.
This is likely to affect those who own shares in a company and receive dividends as a regular income. Dividends from funds and investment trusts are also subject to dividend tax.
The government also announced that the capital gains tax (CGT) allowance will be slashed to £6,000 in 2023-24, down from £12,300. The allowance will be cut again in 2024-25 to £3,000.
This will affect those liable to pay CGT on profits made from selling an asset - such as a second property or valuable possession.
Tax on electric vehicles
As predicted, the Chancellor announced that vehicle excise duty will be rolled out to apply to electric vehicles for the first time, a move that will come into force from April 2025.
As electric car ownership becomes more popular, the government has reportedly been missing out on the revenue generated from the road tax and fuel duty that are currently only paid by petrol and diesel car owners.
Make your money go further
Find the best deals, avoid scams, and grow your savings with our expert guidance. From only £4.99 a month.
Join Which? MoneyCancel anytime.
Stamp duty reduction to last until 2025
The stamp duty cuts announced in September's mini-budget will remain in place until 31 March 2025, and will then be removed.
Until this date, first-time buyers won't need to pay stamp duty on the first £425,000 of the property they buy (up from £300,000); existing homeowners won't have to pay on the first £250,000 (up from £125,000).
The Chancellor said the Office for Budget Responsibility (OBR) expects housing activity to slow over the next two years, by which time the government may introduce new ways to help the housing market.
- Find out more: stamp duty calculator
National Living Wage boost
The National Living Wage, currently £9.50 for workers over 23, will also rise by just under £1 to £10.42 from April 2023.
The government says that it will benefit around two million of the lowest paid workers and represents an annual pay rise worth over £1,600 to a full-time worker.
