Autumn Statement 2022: What it Means For You

With far-reaching announcements on taxes, benefits, pensions, energy bills and new cost-of-living payments, the Autumn Statement 2022 looks set to affect us all.

Tim Leonard Published on 18 November 2022.
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Autumn Statement 2022: What it Means For You

The Autumn Statement 2022 has turned out to be a near full-blown budget in all but name.

Against the backdrop of a cost-of-living crisis, that we are now in recession, and the fallout from September’s mini-budget, Chancellor Jeremy Hunt has had to make some difficult decisions over taxation and government spending.

Here are the key takeaways from this year’s Autumn Statement and what they could mean for you.

How will the Autumn Statement affect your personal finances?

Income Tax

The recent back and forth over income tax has ended up with a reduced threshold at which higher earners pay 45p tax and thresholds being frozen until April 2028, two years longer than had been previously announced. The main National Insurance thresholds have also been frozen until the same date.

A cut in the basic rate of income tax from 20% to 19% that the previous Chancellor Kwasi Kwarteng had wanted to implement from next April, and which would have left more money in people’s pockets, had already been put on hold “indefinitely” by his successor.

Now, following the confirmation that thresholds won’t change until 2028, workers will inevitably end up paying more in tax if their incomes rise. The Office for Budget Responsibility (OBR) believes the move will also see an extra 3.2 million people start to pay tax by the time the freeze ends.

But in an even sharper change of direction, the 45% additional rate of tax that Kwarteng had originally wanted to scrap, and was then reprieved, will now become payable at the lower threshold of £125,140 instead of £150,000. This comes into effect from April 2023 and means that those who earn £150,000 or more will pay around £1,200 extra in tax a year. The OBR estimates that around 2.6 million more people will sit within the higher rate 45% tax bracket by 2027/28.

Pensioners and the triple lock

The good news for pensioners is that the state pension will rise in line with inflation, as per commitments made under the pension triple lock.

With inflation in double digits, it had been thought the extra burden this would place on Treasury coffers could see the lock suspended, similar to what happened in 2021 when another element of the lock – earnings – spiked at 8%.

However, this time the government is remaining true to its word and, from April next year, those in receipt of the state pension can expect to see their payments rise by 10.1%, worth on average around £870 over the year.

Pension credit will also rise by 10.1% from April 2023, while all pensioner households will receive a £300 cost-of-living payment. Pensioners could also receive a further £900 means-tested benefit and £150 disability payment if they qualify.

Benefits and cost-of-living payments

Similar doubts had been raised as to whether state benefits would rise in line with inflation. However, as with the state pension, the Chancellor confirmed working age benefits and the benefit cap will also rise by 10.1%.

In addition, more than eight million households in receipt of means-tested benefits will receive a cost-of-living payment of £900. This includes claimants of:

  • Universal Credit
  • Income Support
  • Income-based Jobseekers Allowance
  • Income-related Employment and Support Allowance
  • Working Tax Credit
  • Child Tax Credit
  • Pension Credit

Recipients of non-means-tested disability benefits will get a payment of £150, and could also get the means-tested and pensioner payments if they qualify.

This includes those eligible for:

  • Disability Living Allowance
  • Personal Independence Payment
  • Attendance Allowance
  • Constant Attendance Allowance
  • Armed Forces Independence Payment
  • War Pension Mobility Supplement
  • Scottish Disability Benefits

National Living Wage

In support of low-paid workers, it’s been announced those over the age of 23 will see a 9.7% rise in the National Living Wage to £10.42 an hour from next April. This could see the earnings of a full-time worker increase by £1,600 a year.

Apprentices and workers under the age of 23 on the National Minimum Wage will also see an increase in their earnings. Those aged 21-22 will see a 10.9% increase to £10.18 an hour, while those aged 18-20 will get a 9.7% rise to £7.49 an hour.

Workers aged 16-17 years old and apprentices will also see a rise of 9.7% to £5.28 an hour.

Energy bills

The problem of energy price rises cannot be ignored, so it’s welcome news that help with bills, in the form of the Energy Price Guarantee, is to be extended beyond its current end date of April next year until April 2024.

The downside is that the help is getting smaller from April 2023, after it was confirmed the price cap which applies to typical household energy bills will increase from £2,500 to £3,000.

However, support for households that use alternative fuels, including heating oil, LPG, coal or biomass, will double to £200.

» MORE: Help if you can’t afford your energy bills

Stamp duty

The stamp duty cuts for homebuyers in England and Northern Ireland, announced in the mini-budget, will end on 31 March 2025, meaning the general nil-rate threshold will drop back to £125,000 from £250,000.

The threshold at which first-time buyers don’t have to pay stamp duty will also fall back, to £300,000 from £425,000, while the value of a property on which first-time buyer stamp duty relief can be claimed will return to £500,000 from £625,000.

What else was announced?

  • Allowances and thresholds for inheritance tax will remain unchanged for a further two years, going up to April 2028.
  • The allowance on dividend tax will be lowered from £2,000 to £1,000 next year, and then reduced to £500 in April 2024.
  • The capital gains tax allowance on which tax doesn’t have to be paid will reduce from £12,300 to £6,000 next year and then drop to £3,000 with effect from April 2024.
  • Rents for tenants in the social rented sector will rise by no more than 7% in 2023/24, rather than potentially by 11%, as could have happened in line with the usual rules of inflation plus 1%.
  • Electric vehicles will no longer be exempt from vehicle excise duty and will attract road tax from April 2025.

» MORE: What the Autumn budget means for businesses

Image source: Getty Images

About the author:

Tim draws on 20 years’ experience at Moneyfacts, Virgin Money and Future to pen articles that always put consumers’ interests first. He has particular expertise in mortgages, pensions and savings. Read more

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