The Chancellor of the Exchequer Jeremy Hunt has delivered his Autumn Statement and it’s an interesting one. There has been a lot in the media over the last couple of days about taxes, wages and benefits but now we have the full picture about what’s planned.
National Living Wage
There will be some quite significant changes to the National Living Wage next spring. At the moment, only those aged 23 and over are paid the NLW with younger workers and apprentices being paid various levels of National Minimum Wage but from April next year, the age at which employees start receiving the NLW will decrease to 21 years, so those aged 21 and 22 will be included for the first time.
In addition, the NLW rate will increase by just over £1 an hour – from £10.42 an hour currently to £11.44 an hour. That means anyone working 37 hours a week will receive nearly £2,000 a year more before tax.
National Insurance
This isn’t the first time our Budget or Autumn Statement blog posts have focused on National Insurance. But the Chancellor also announced some quite big changes here and it is the mechanism by which he has delivered the much-anticipated tax cuts, especially as he kept the freeze on the threshold when people start paying tax, meaning more people will become taxpayers as wages rise.
The headline rate of National Insurance will reduce from 12% to 10%. And he’s not waiting until next April to implement this either; it will be from 6th January which means we’ll see a little more in our pay packets during January.
For the self-employed, who pay their National Insurance in a slightly different way, an entire class of contributions – Class 2 – is being abolished entirely from next April. And the rate at which they pay Class 4 on profits over £12,571 is being reduced to 8% from the current 9%.
Benefits & pensions
It was confirmed that working age benefits will increase by 6.7% in April, a figure taken from September’s high inflation rate. In addition, Local Housing Allowance rates will also increase to reflect the increase in rents recently. The Chancellor also announced investment in schemes to help those with health conditions or who have been unemployed for more than a year get back into work.
The pensions triple lock has once again been maintained and so state pensions will rise by 8.5% from April, in line with average earnings.
Business initiatives
There was also some news for businesses in the Autumn Statement. The tax break that allowed companies to deduct spending and investment on new machinery from profits so lowering the tax bill has been made permanent.
Retail, hospitality and leisure companies – all of whom have been hit really hard by the cost of living crisis – will continue to get a 75% discount on business rates for another year.
Duties
There is often a change in various duties during these statements and this year is no different. There will be no change to alcohol duty for now, but tobacco duty rises by 2% and hand rolling tobacco duty by 12%. The Chancellor didn’t mention fuel duty so that will remain unchanged.
Cornwall Devolution Deal
Finally, and as it’s something close to home, we should mention that the Chancellor announced that a new devolution deal has been proposed for Cornwall. It includes measures that focuses on skills, green energy and Cornish culture and there’s more information here.