The timing of this has moved around a bit over the last couple of months but finally on Thursday, the new Chancellor of the Exchequer stood in parliament to deliver his Autumn Statement. It included changes to wages, pensions, benefits and taxation and so as we traditionally do, here’s a rundown of some of the details.
National Living Wage
With inflation so high, the Chancellor announced that the National Living Wage rate for those over 23 will increase to £10.42ph in April, up from £9.50ph now. The National Minimum Wage rates will also be increased for people aged 21-22 by 10.9% to £10.18 an hour, for those aged 18-20 by 9.7% to £7.49 an hour, for 16-17 year olds by 9.7% to £5.28 an hour, and for Apprentices by 9.7% to £5.28 an hour.
Whilst no announcement was made about plans to either increase or decrease the rate of income tax, there is a plan to freeze personal allowances until April 2028. That means that, as pay increases, more people might start paying tax for the first time, or more people might tip into the higher rate.
The threshold for paying the highest rate of income tax, which is 45%, has been reduced to £125,140 from £150,000. This is a complete reversal of the situation in September, when it was announced that the 45% rate would be scrapped altogether.
Pensions & benefits
After months of speculation, it was confirmed that the ‘triple lock’ on pensions would be retained, which means the state pension will rise by 10.1% or £780 per year. In addition, pensioner households will receive £300 to help pay for energy bills. There is a review into the state pension age due in early 2023 so for some, the age they might retire at could change.
Benefits will also rise by 10.1% and those on means-tested benefits will receive a £900 cost of living payment – details on how that will be paid will be announced soon.
As always, if you need any help with working out what the budget will mean for your payroll and staff costs, just get in touch. A rundown of some of the other announcements made today around things such as windfall tax, capital gains tax and energy price cap can be found here: https://www.bbc.co.uk/news/business-63555313