Autumn Statement highlights for individuals
By Pura Vida – Personal Financial Planning
(Pura Vida are the personal financial planning partners of MAP. They support our clients in putting life first, so that together we can build a business that gives you the life you want.)
In November 2023, Jeremy Hunt delivered his Autumn Statement, with tax cuts and benefits rises in preparation for an upcoming general election.
For the economic forecasts, whilst GDP will grow by 0.6% this year (better than the 0.2% dip forecasted in March), growth is expected to slow overall. This is because while inflation is expected to drop to 2.8% by the end of 2024, it is taking longer to fall, and will take until 2025 to meet the OBR’s target of 2%.
Prices will continue rising, but at a much slower rate than in recent years. And though headlines mention the largest reduction in living standards since the 1950s, the OBR says we should return to pre-pandemic living standards by 2027-28.
As always with government statements and budgets, these announcements have little impact on your financial plan, which we regularly review and rigorously stress test. As part of this, your investment portfolio is globally diversified, aligned with your needs and built to create long-term wealth.
Here’s our key takeaways from the rest of the statement:
State Pension Increase
The State Pension will rise by 8.5% in April 2024, following the triple-lock formula based on average earnings, inflation, or 2.5%. This will result in £221.20 per week for the full new flat-rate State Pension.
National Insurance (NI) Cuts
From 6 January, the rate of National Insurance (NI) will reduce from 12% to 10% for employees earning between £12,570 and £50,268. This should save £450 for someone with an average salary of £35,000.
For the self-employed, Class 2 NI contributions will be abolished (currently £3.45 pw), and the Class 4 NI rate will reduce from 9% to 8% (on earnings between £12,570 and £50,270).
Minimum Wage Increases
Minimum wages will rise in April 2024, and the National Living Wage will increase from £10.42 to £11.44 per hour. Other age groups and apprentice rates will also see adjustments.
‘One Pension Pot For Life’
The government is calling for evidence with a view to launching ‘one pension pot for life’. This would give savers a legal right to require a new employer to pay pension contributions into their existing pension, and avoid the need to set up (and manage) a new pension with every new job.
For the long read, the government has published the full budget and related documents here.
If you have any questions or if there is anything we can do to help, please don’t hesitate to contact us.
All the best,
The Team at Pura Vida