Autumn Statement 2023: five things you should know

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Today, Jeremy Hunt announced his Autumn Statement. From State Pension changes to cuts to National Insurance, there were 110 new measures to get through. To keep it simple, here’s a roundup of our top five.

1. The State Pension is going up…again

Pensioners are getting an 8.5% boost to their State Pension – the second record-high increase in a row, thanks to the triple lock.

The triple lock is what’s used to decide how much to increase the State Pension by. It says the State Pension will need to rise by the highest of three measures: average wage growth, inflation or 2.5%. 

The 10.1% rise announced in last year’s Autumn Statement was down to September’s high inflation rate. This year’s is because of rising wages. 

The increase means, from next April, those on the full new State Pension will get an extra £17.35 a week, taking their weekly amount up to £221.20. Overall, it’s an increase of about £900 a year.

2. National Insurance cuts

Major cuts to National Insurance (NI) were announced.

First, the main employee NI rate will be cut from 12% to 10%. Currently you pay this on earnings above £12,570 up to £50,270. They’re fast-tracking this measure so it’ll take effect from 6 January 2024 – in time for your 2024 pay. 

On top of this, Hunt also announced major NI cuts for the self-employed. Class 2 NI contributions will be abolished completely in April 2024. Plus, Class 4 NI contributions – paid on profits between £12,570 and £50,270 – will reduce from 9% to 8%.

Class 2 contributions are currently used to build up your NI record and contribute to things like benefits and your State Pension. Hunt confirmed that there will be no impact to this, and you’ll still be able to pay voluntary contributions as well.

3. One pension pot for life?

The Chancellor said he was going to consult on giving pension savers a ‘pot for life’. The idea is that you could choose to have your employer pay into an existing pension pot, rather than opening a new pot when you start a new job. 

The hope being that having the option of one pension pot that follows you from job to job, rather than having to transfer or combine your pots every time you get a new employer, could prevent people from ‘losing’ their pots over their lifetime.

Currently there’s almost £27 billion sitting in lost pensions – much of it in small, forgotten pots. In fact it’s estimated that, without intervention, the amount of these lost small pots could increase from 8 million to 27 million by 2035.

Gail Izat, Managing Director for Workplace at Standard Life, part of Phoenix Group said: “A pot for life might be appealing from a simplicity perspective as the pension could follow people from job to job but there are bigger priorities facing savers and the pension industry that we would tackle first.”

4. Multiple ISAs of the same type

From April 2024, you’ll be able to open multiple ISAs of the same type. You could previously only have one of each. 

This could be particularly good news for you if you’ve got a fixed-rate cash ISA but have seen other providers offering better rates than the ones you’ve currently got. The ability to open a new ISA in the same tax year could be a big win and allow you to make the most of your £20,000 yearly ISA allowance.

5. An increase to the National Living Wage

The National Living Wage is going up to £11.44 per hour and will apply to 21- and 22-year-olds for the first time. This’ll happen from April next year.

It’s good news for those battling with inflation, but it could also have another added benefit…

Right now, you need to earn more than £10,000 to qualify for auto-enrolment, but the National Living Wage rise could bring some people above the threshold for the first time. Meaning they’ll get a pension plan automatically opened for them and paid into on their behalf by their employer. Making saving for their future a little bit easier.

Pensions plans are investments. They can go down as well as up in value and may be worth less than what was paid in.

Tax rules and legislation may change and your individual circumstances and where you live in the UK will have an impact on the tax you pay.

The information here is based on our understanding in November 2023 and should not be taken as financial advice. If you’re unsure please speak to financial adviser.