It’s been a busy few weeks for the current Conservative government. A prominent minister has been sacked and thereafter followed a reshuffling of Cabinet. One area of consistency within the Cabinet is the Chancellor of the Exchequer, a position still held by Jeremy Hunt. This stability was much needed in the run-up to the Autumn Statement announcement from the Treasury. Inflation recently fell to the lowest level it has been at for two years. Despite this, there were no major policy changes announced in the Statement. With a General Election looming, it’s widely expected any major changes will be held off, or used as manifesto pledges.
In fact, many of the announcements that analysts and experts predicted did not come to fruition. There were none of the expected announcements about inheritance tax, ISAs, savings or stamp duty. However, the Statement did bring some announcements, including about the Pension Triple Lock. Can’t make head nor tail of the political jargon? Don’t worry – we’re cutting through the jargon and deciphering the Statement for you. Read on to find out more.
Pension Triple Lock
The Pension Triple Lock is a policy put in place to ensure that the State Pension is protected from inflation. It guarantees that each year in April, the pension will rise by the highest of three factors:
- the level of inflation in the previous September
- the average increase in earnings in the previous July
- 2.5%
Find out more about the Pension Triple Lock in our previous blog post. In the 2022 Autumn Statement, it was confirmed that in April 2023 the State Pension would rise by 10.1% to match inflation. However, the average increase in earnings was not considered in this calculation. This is due to the uncharacteristically high increase in earnings following the Coronavirus pandemic.
It was widely predicted that the Chancellor would follow the same process, suspending the Pension Triple Lock for the second year in a row. This was due to the bonus received by some public sector workers skewing the average earnings growth. However, the Chancellor announced that the Triple Lock would be followed in full. The State Pension will therefore increase by 8.5% – the average earnings growth including bonuses – from April 2024. This will mean a new State Pension of £221.20 per week following the increase, worth up to £900 more per year.
Further announcements
Along with the Pension Triple Lock announcement, changes were made to the National Insurance payments made by the employed. This will decrease from 12% to 10%, putting an extra £450 in the pocket of someone earning £35k per year. Unusually, instead of waiting until the new tax year, this change will take place from January 2024.
Universal Credit will increase in line with inflation at a rate of 6.7%, worth around £470 per year. There will be an increase in the National Living Wage to £11.44 per hour, from April 2024 also. The self-employed will see savings in National Insurance too.
We hope that this has helped you to understand the latest news from the Treasury, and how it will impact you.
For those wanting a more in-depth understanding of the announcements, download our Autumn Statement Overview here.
If you have any further questions, please don’t hesitate to contact us.
