Upcoming Autumn Statement 2023: When UK chancellor Jeremy Hunt announces the government’s autumn statement regarding its budgetary objectives on November 22, he won’t have much leeway. The Bank of England’s present approach of slowing down economic activity through rate hikes is intended to reduce inflation, and this is something the government is committed to supporting.
Upcoming Autumn Statement 2023
Hunt is therefore prohibited from taking any actions that would swiftly increase government, corporate, or individual spending, such as implementing universal income tax cuts. However, his main focus will probably be on prolonging tax incentives for corporate investment with the long-term goal of promoting economic growth.
Although the government normally reserves its most ambitious financial plans for its yearly budget presentation in March, a few modest initiatives that may be included in the autumn statement and affect your finances have been tested recently.
1) ISA revision
One possible way to complement the business theme could be to restructure individual savings accounts (ISAs). Introduced in 1999, these tax-sheltered savings plans provide you the choice of investing your money in riskier securities like stocks and shares, or in the security of cash savings.
Currently, cash makes up six out of ten ISA accounts, but there are rumours that the chancellor intends to change ISAs to become a source of funding for British businesses. To promote greater share ownership, this may entail increasing the annual ISA limit—currently set at £20,000—for accounts that invest in UK businesses.
2) More help for mortgages
The cost of an average first home decreased marginally over the course of the year ending in August 2023, according to mortgage company Halifax, but in certain places it can still be up to ten times the average income.
In light of this, the government may decide to keep the mortgage guarantee programme in place past December 31, 2023, at least for first-time homebuyers, for an additional year. Under the programme, lenders offering 95% mortgages—which allow borrowers to put down as little as 5% of the property’s value—are backed by the government.
However, there has been opposition to the plan. These kinds of programmes raise demand even though they can help some people afford to become homeowners. If no other measures are taken to encourage the supply of homes, this may maintain high housing costs.
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3) Return of stamp duty
Purchasers of homes in England and Northern Ireland who spend more than £250,000 (or £425,000 for first-time purchasers) are required to pay stamp duty land tax. Scotland and Wales have similar tax rates.
Stamp duty land tax rates are unlikely to be lowered, and in any case, the present threshold has been raised until March 2025. On the other hand, there are rumours that the government is thinking about offering a partial stamp duty refund to homeowners who upgrade their home’s energy efficiency within two years of purchase.
Compared to the need for the UK housing stock to be completely green, this seems like a drop in the ocean. It makes up about 6% of the carbon dioxide emissions in the UK. However, it can be a cheap compromise to win over buyers.
4) Tax cut on inheritance
Another enduring speculation is that the present administration may reduce or maybe eliminate inheritance tax, which is levied on money and assets you donate.
It is mostly a tax on your estate at death because the majority of gifts made during your lifetime are exempt from it. Nonetheless, a portion of your estate up to £500,000 (or £1 million for married or civil partnership couples) may be handed on tax-free. The tax rate is typically a significant 40% above that.
Even though inheritance tax is still extremely unpopular, the exemptions imply that less than 4% of deaths result in a levy. Thus, even if the majority of people don’t pay it, reducing or eliminating it might be a popular choice.
5) Changes to state pensions
The government is now committed to upholding the “triple lock,” which means that state pensions will increase in April of each year by the greater of 2.5%, wage inflation (during the quarter ending in the preceding July), or price inflation (based on the numbers from the previous September).
We already know that under the triple lock, the state pension is scheduled to increase by 8.5% in April 2024 in accordance with average wages (including bonuses) since the pertinent data has already been made public.
Nevertheless, the Act is silent on the average earnings metric that the state is required to employ. This leaves some leeway, and there have been rumours that state pensions would be raised in accordance with the growth in regular earnings (excluding bonuses) of 7.8%, rather than the entire amount of compensation.
The government would save about £900 million if the lower amount was used. Furthermore, your pension would increase to £219.75 per week if you receive the entire new state pension, as opposed to £221.20 under the higher amount.
6) Suspension Benefits
The government may decide to stop paying working-age people’s benefits, which would be a dramatic contrast to state pensions. There are rumours that ministers are thinking about making cuts to the UK’s welfare budget that would save billions. Given that roughly three-quarters of the 3.8 million financially impoverished people in the UK get state assistance, this could be viewed as a heartless action. The Joseph Rowntree Foundation is a think tank.
Officially, the statement’s specifics won’t be revealed until the chancellor addresses the legislature. Even though there has been a lot of conjecture in the last few weeks and months, you won’t know for sure how your money will be impacted until then.
