What to expect from the Autumn Statement 2023 – from first -time buyer help to taxes and benefits | The Sun
CHANCELLOR Jeremy Hunt will deliver his Autumn Statement in just a week's time – and it could have huge implications for your pocket.
It will be read in the House of Commons next Wednesday (November 22) at around midday.
In the statement, the government outlines its plans for tax hikes, cuts and things like changes to the minimum wage.
Speaking in the House of Commons, Jeremy Hunt said he plans to deliver "autumn statement for growth" made possible by falling inflation.
Inflation has fallen to its lowest level for two years, dropping to 4.6 per cent in the year to October – down from 6.7 per cent in September.
It means Prime Minister Rishi Sunak has hit his target to halve inflation, a promise he made at the beginning of the year amid the cost of living crisis when the rate had hit 10.7 per cent.
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Of course we won't know exactly what's coming in the Autumn Statement until the day itself, but we've looked at what could be expected.
Here are the announcements that could be coming – from benefits to help buying a home – here's how they can affect your finances.
Isa reform
What is it?
An Isa is a type of savings account but with tax benefits: you don’t pay tax on any interest you earn.
The most common types are cash Isas and stocks and shares ISAs, where your money is invested in the stock market.
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Everyone over 16 has an annual Isa allowance of £20,000.
From the age of 16, you can pay into a cash ISA, but you must be over 18 to invest in a stocks and shares Isa.
There is no limit to the number of Isa you can have overall, but you can only pay into one of each type in a single tax year.
What's expected?
The Chancellor is said to considering a change to Isa rules next year so that people can pay money into more than one ISA of each type in a tax year.
This would mean savers could open multiple new ISAs as new deals become available.
AJ Bell head of retirement policy, Tom Selby said: “This would be a helpful change but, far more importantly, it potentially paves the way for radical reform of the ISA system to make it much more flexible and customer friendly."
A change to Lifetime Isa (Lisa) rules could also be on the cards.
You can only withdraw money from a Lisa if you're buying your first home, you're aged 60 or over, or you're terminally ill with less than 12 months to live.
Take cash out for any other reason and you'll be slapped with a 25% on the amount taken out.
During the pandemic, the government reduced the withdrawal charge to 20%, to lessen the blow for people needing to access their cash.
AJ Bell head of personal finance, Laura Suter, said Mr Hunt could introduce a similar policy to help people during the current cost of living crisis.
She said: "Reducing the exit fee would be a low-cost move for the government that would help first-time buyers who saved into their Lifetime ISA in good faith but, due to soaring inflation, now need to dip into their savings."
Benefits freeze
What is it?
Benefits payments generally rise every April in order to keep up with the cost of things like food and household bills.
The process is known as "uprating" and tends to see payments go up by the previous September's inflation rate.
Inflation stuck at 6.7% in September.
The Chancellor will confirm how much benefits will be uprated by in his statement.
Uprating ensures that payments can keep up with the cost of living like food, clothes and fuel.
What's expected?
The government might freeze benefit payments for working-age people.
Ministers are rumoured to be considering cuts that would slice billions off the UK’s welfare budget.
Inheritance Tax
What is it?
Inheritance tax is paid on the value of someone's estate after a person passes away.
The estate includes things like property, money and possessions.
Any inheritance tax due is calculated on their value of the estate on the date of someone's death and is paid within six months.
What's expected?
It is rumoured that inheritance tax could be cut or even abolished.
Most lifetime gifts escape the tax, so it is mainly a tax on your estate when you die.
However, up to £500,000 of what you leave (up to £1 million for couples who are married or in a civil partnership) can be passed on tax-free.
Above that, the tax rate is usually 40%.
The exemptions mean less than 4% of deaths result in a charge, but inheritance tax is still deeply unpopular.
Stamp duty cut
What is it?
Stamp duty is the tax you pay when buying a home.
A cut to the housing tax was initially announced in the mini-budgetin September 2022.
Before the cut, no Stamp Duty was paid on the first £125,000 of any property purchase.
That's now double at £250,000 for all home purchases.
The threshold at which the duty was paid for first-time buyers was £300,000. But that is now £425,000.
The maximum value of a property on which first-time buyers’ relief can be claimed also increased from £500,000 and is now £625,000.
It was later announced that the cut will remain in place until March 31, 2025.
What's expected?
Prime Minister Rishi Sunak and the Chancellor are said considering a partial stamp duty rebate for buyers who improve the energy efficiency of their home within two years of purchase.
There may also be a change to the thresholds, or an extension of the existing deadline.
Anyone buying a home could have more time to complete their purchase and take advantage of the tax saving.
While other who may not have initially benefited from the cut, may find themselves paying less stamp duty, or even none at all.
Help for first-time buyers
What is it?
There are a number of schemes to help first-time buyers already – but there could be more on its way.
If you are unable to save the deposit needed to buy a home or can’t afford the mortgage payments, Shared Ownership could be worth a closer look.
The government-backed scheme allows people to buy a portion of a property and pay rent to a landlord on the rest.
First-time buyers can bag a home with a discount of up to 50% using this government scheme.
The home’s discount will stay with the property forever and you won’t be able to cash in on the saving when it comes to selling.
To access the scheme, you will need to have a deposit worth at least 5% of the discounted purchase price and earn less than £80,000 a year or £90,000 in London.
Local councils may also add further rules such as a local connection or reserving the properties for key workers only.
Meanwhile, Lifetime Isas can be opened by anyone aged 18 to 39.
When you open a Lifetime Isa the government will add 25% to your savings, up to a maximum of £1,000 a year.
That means if you put in £4,000 a year you'll get a £1,000 free cash bonus to put towards your first home.
What's expected?
Mr Hunt is said to be mulling over a package of support to help first-time buyers get on the property ladder.
One of the options said to be being considered is an extension to the government's mortgage guarantee scheme.
It allows buyers with a small deposit of 5% to get a 95% loan to value (LTV) mortgage.
The initiative was originally due to finish at the end of 2022, but it is now set to come to an end on December 31, 2023.
The Treasury is also said to be considering a new type of individual savings account (ISA), targeted at people looking to get a deposit together.
Council Tax hikes
What is it?
Council tax pays for local services such as schools, rubbish and recycling collection and street repairs.
The costs can vary dramatically between councils, but bills have generally increased for all areas over the last few years.
What's expected?
The government is being urged to help councils fill a funding gap of £4billion over the next two years, according to The Local Government Association (LGA).
Council Tax rises every year, but there are fears that households may see council tax hikes as a means of filling this financial hole.
It comes after The Sun revealed that bills can vary by hundreds of pounds, depending on where you live.
Cost of Living payments
What is it?
Millions of households have received cash support from the government over the last 18-months in the form of cost of living payments.
This year, the cash is worth up to £1,350 in total.
Payments landed in accounts this spring and summer, but more are coming.
Overall, £900 is being handed out to each household on means-tested benefits in three instalments.
A £150 cost of living payment has also been given to eligible people with certain disabilities.
Plus, a £300 pensioner payment will follow later this year.
What's expected?
Hard-up households will be wondering if if any more cost of living payments are in the pipeline.
There has been no word on whether more cash support is on the way yet.
Benefit and State Pension payments to rise
What is it?
Benefits payments generally rise every April in order to keep up with the cost of things like food and household bills.
The process is known as "uprating" and tends to see payments go up by the previous September's inflation rate.
Inflation is a measure of how the price of goods and services has changed over the past year.
While state pension increases by whatever is highest from inflation, wages or 2.5% – this is known as the triple lock.
What's expected?
Jeremy Hunt will confirm how much benefits will uprated by in the autumn statement.
If the uprating does go ahead at 6.7% – the rate of inflation in September – it'll mean an increase for those on Universal Credit (UC) as well as other benefits.
The current standard allowance for single UC claimants under the age of 25 is £292.11 a month, if it were to go up by 6.7% it would be £311.68 – an increase of £19.57.
Of course, the exact amount your payments will rise to depends on how much you get now.
The following benefits are also legally required to rise with the previous September's rate of inflation each April:
- Personal independence payment (PIP)
- Disability living allowance
- Attendance allowance
- Incapacity benefit
- Severe disablement allowance
- Industrial injuries benefit
- Carer's allowance
- Additional state pension
- Guardian's allowance
But it's important to remember the government could decide to increase benefit rates by a different amount.
Meanwhile, there are fears that millions of pensioners could miss out on a £901 cash boost as ministers consider a tweak to the triple lock.
The expected 8.5% increase to pension pots risks being cut to 7.8%.
It would mean pensioners received a a £826 annual hike in the state pension rather than the expected £901.
However Rishi Sunak has insisted that he remains committed to the triple lock.
Business rates and alcohol duty
What is it?
Business rates are a tax that firms such as shops, offices, pubs and factories pay to their local council.
Companies have repeatedly called for an overhaul of the system, complaining that it's outdated and unfair.
Business rates relief is currently 75%, but hospitality suggest the pub sector will face a near £1billion whack if the Government does not extend current support.
Meanwhile, heated alcohol levies increased by 10.1% on August 1.
This represented the biggest shake-up to duty rates since 1975.
The new system will now tax liquor on its alcoholic strength and consist of six standardised alcohol duty bands.
What's expected?
Hospitality UK say one in ten boozers could go out of business if the Chancellor fails to extend business rates relief in his Autumn Statement.
The Sun launches a Save Our Sups campaign to protect the great British boozer.
The rate of closures now means there are fewer than 100,000 pubs across the UK.
UK Hospitality reckons freezing business rates relief will save the sector £630million and spare it an inflation-linked rise costing a further £230million.
Fuel Duty changes
What is it?
Fuel duty is a tax on fuel including petrol, diesel, biodiesel and bioethanol.
VAT (Value Added Tax) is also charged on most fuel.
The Sun's Keep it Down campaign has forced ministers to freeze duties for 13 years in a row.
What's expected?
It is likely that drivers will be saved from more petrol price rises as there are no changes for fuel duty expected in the autumn statement.
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