In this article, we provide a summary of today's Autumn statement so you can see at a glance how it is likely to impact your finances.
Click on the links below for more information or scroll down to read the full article:
- National Insurance cut from 12% to 10% starting in January 2024
- Changes to National Insurance for self-employed
- Changes to ISA rules for 2024/25
- Increase to the National Living Wage
- Increase to state benefits
- State pension increase from April 2024
Taxation
National Insurance for employees
The main rate of National insurance (charged on earnings between £12,570 and £50,270) is being cut from 12% to 10% from January 6th 2024. It means that an average worker on £35,400 would receive a tax cut of £450 in the 2024/25 tax year and is estimated to impact around 27 million people.
How much will you save on National Insurance?
| Salary | Effective Tax Cut
(% drop in tax you will pay) |
Monthly difference
(how much better off you will be after tax) |
Annual Difference
(how much better off you will be after tax) |
| Under £12,570 | No change | No change | No change |
| £25,000 | 6.25% | £20.71 | £248.52 |
| £37,500 | 6.25% | £41.54 | £498.48 |
| £50,000 | 6.25% | £62.37 | £748.44 |
| £75,000 | 3.36% | £62.82 | £753.84 |
| £100,000 | 2.29% | £62.82 | £753.84 |
National insurance for self-employed
Class 2 National Insurance - The Chancellor announced that this will be abolished from 6th April 2024. Class 2 National Insurance was previously payable on profits above the small profits threshold of £12,570 at a rate of £3.45 per week. Voluntary payments can still be made and contributions will remain at £3.45 for the 2024/25 tax year. The removal of Class 2 National Insurance will not impact your entitlement to the state pension or other benefits.
Class 4 National Insurance - Payable on profits between £12,570 and £50,270, the rate of class 4 National Insurance has been cut by 1 percentage point, reducing from 9% to 8%.
Taken together, the changes to Class 2 and Class 4 National Insurance are likely to affect around 2 million self-employed people. It represents a saving of around £350 for the tax year 2024/25, based on an average self-employed salary of £28,200.
Savings & Investments
While not part of the Chancellor's address to the House of Commons, the Autumn statement includes a number of changes to Individual Savings Accounts (ISAs) and we highlight the two main changes below. Read our article 'The ISA changes announced in the Autumn Statement 2023' for the full list of changes, including the anticipated changes that didn't come to fruition.
- Multiple ISA subscriptions will be allowed - From April 2024, the government will allow multiple subscriptions to ISAs of the same type in the same tax year
- Partial transfers between ISA providers will be allowed - Partial transfers of ISA funds in-year between providers will be allowed from April 2024
Elsewhere the sunset clause on Venture Capital Trusts (VCT's) and Enterprise Investment Schemes (EIS's) has been extended from April 2025 to April 2035. Previous legislation meant that the tax-relief available on investments into VCTs and EIS would cease on shares issued after April 2025. The extension now moves that date to April 2035.
National Living Wage
The National living wage for those aged 23 and over has been increased by 9.8% from £10.42 to £11.44 per hour from April 2024. Additionally, the government has confirmed that the new rate will apply to those aged 21 and 22, an effective increase of 12.4% for 21 and 22-year-olds.
We summarise the changes to the National Living Wage for April 2024 below.
- Rate for those over 23 increased by 9.8% - from £10.42 an hour to £11.44
- Rate for 21-22-year-olds increased 12.4% - from £10.18 an hour to £11.44
- Rate for 18-20-year-olds increased by 14.8% - from £7.49 an hour to £8.60
- Rate for 16-17-year-olds increased by 21.2% - from £5.28 an hour to £6.40
- Rate for apprentices increased by 21.2% - from £5.28 an hour to £6.40
State benefits
State benefits
Inflation-linked state benefits such as Universal Credit will increase by 6.7% in April 2024. The rise mirrors September's inflation figures according to the Consumer Price Index (CPI).
Pensions
The Chancellor confirmed today that the triple lock rule has been honoured for the 2024/25 tax year meaning state pensions will rise by 8.5% in April 2024. Below, we explain how the rise could impact you.
State pension increase from April 2024
- Reached state pension age prior to 2016 - State pension will rise from £156.18 to £169.48 per week - a rise of £13.30 per week
- Reached state pension age after 2016 - State pension will rise from £203.85 to £221.20 per week - a rise of £17.35 per week
Business
- 'Full expensing' - a tax break for businesses that allows them to deduct spending on new machinery and equipment from profits - has been made permanent. The OBR estimates that the measure will lead to additional business investment of around £14 billion over the forecast horizon
- Those in retail, hospitality and leisure will receive an extension of the 75% business rates discount for a further year
- The small business multiplier will be frozen for a further year
Duty
- Alcohol duty will be frozen until August 2024
- Duty on hand rolling tobacco increased by RPI+12% from 6pm on 22nd November 2023
Energy
- There was no announcement of new government support to help consumers with energy bills this winter
Housing
- The Mortgage Guarantee Scheme which supports the availability of 95% Loan-to-Value mortgage products, which was previously due to end on 31st December 2023, was extended by 18 months
- There will be increased help to pay rent. Since 2020, there has been no increase in the Local Housing Allowance rates, which aid private renters through housing benefits or universal credit. As rental prices have risen sharply, this has led to financial difficulties for many. The allowance is now set to cover 30% of local market rent values.
Further reading
- What is the state pension triple lock?
- State pension to rise by 8.5% in April 2024
- The ISA changes announced in the Autumn Statement 2023
- A complete guide to the Cost of Living Payments
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