The recently delivered Autumn Budget by the Chancellor of the Exchequer, Jeremy Hunt, has introduced a raft of new measures.
These aim to stimulate economic growth, support households, and address the ongoing cost of living crisis.
As individuals and businesses seek to understand the implications of these changes, this blog provides an overview of the key points of the Autumn Budget statement and their potential impact.
Key Measures for Individuals
The Autumn Budget introduced several measures designed to alleviate the financial burden on individuals, including:
- An increase in the National Living Wage to £11.44 per hour from April 2024. This increase will directly benefit millions of low-income workers.
- A cut in the rate of National Insurance contributions for self-employed individuals to 8% from April 2024. This reduction will provide a welcome boost to small business owners and the self-employed.
- A freeze on business rates for 2024-25. This measure will help to support businesses struggling with rising costs.
- An extension of the retail, hospitality, and leisure relief scheme until March 2024. This extension will continue to provide support for businesses in these sectors.
- No change to Inheritance Tax.
- Abolition of the Pension Lifetime Allowance. As announced in the spring budget, the current LTA will be abolished, and there will be a new lump sum and death benefit allowance of £1,073,100 and a maximum PCLS (tax-free Cash) of £268,275. Various protections and new qualifying rules are to be taken into account.
- Auto Enrolment Workplace Schemes. These changes will allow a member to choose where their contributions are paid, such as an existing scheme, as opposed to joining a new one. In theory, this is a good idea, but it could lead to issues of schemes being used that are not as cost-effective as the workplace scheme and may have higher charges.
- State Pension. The Government is maintaining the triple lock. The Basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 by 8.5%, in line with earnings growth in September 2023
Measures to Address the Cost of Living Crisis
The Autumn Budget also included several measures aimed at addressing the ongoing cost of living crisis, including:
- An increase in the Warm Homes Discount to £300 from October 2024. This increase will provide additional support to low-income households with their energy bills.
- An extension of the Household Support Fund until March 2025. This fund provides financial assistance to vulnerable households facing hardship.
- A £50 million increase in funding for the Local Housing Allowance. This increase will help to support low-income households with their rent costs.
Measures to Boost Economic Growth
The Autumn Budget also included several measures aimed at boosting economic growth, including:
- A permanent extension of the full expensing scheme for investment in plant and machinery. This scheme allows businesses to write off the entire cost of such investments upfront.
- A reduction in the corporation tax rate for loss-making companies from 25% to 19%. This reduction will encourage investment and job creation.
- The annual investment allowance increased to £1 million from April 2024. This increase will allow businesses to invest more in capital assets.
Individual Savings Accounts (ISAs)
While the Chancellor’s Autumn Statement focused on broader economic measures, it also included some noteworthy changes to ISAs. Although there no increase to the annual allowance was announced, the government is introducing a few fundamental changes that will enhance flexibility and simplify ISA management.
Holding Multiple ISA Subscriptions
- Effective April 2024, savers and investors can hold multiple ISA subscriptions of the same type in the same tax year. This means you can open and contribute to various cash ISAs, stocks and shares ISAs, or Lifetime ISAs from different providers, providing greater flexibility in managing your savings and investment portfolio.
Impact on Savers and Investors
These changes to ISAs are expected to provide greater flexibility and convenience for savers and investors.
Holding multiple ISA subscriptions will allow individuals to spread their savings across different providers and benefit from better interest rates or investment opportunities.
Additionally, the continued freeze on ISA allowances provides stability and predictability for long-term financial planning.
Overall, the Autumn Budget’s ISA-related announcements represent a positive step towards enhancing the attractiveness and usability of these popular savings vehicles.
The Autumn Budget has introduced various measures designed to address the current economic challenges and support individuals, businesses, and the broader economy.
While the full impact of these changes remains to be seen, they represent a significant step towards navigating the current economic climate
If you have any specific questions or concerns, do not hesitate to contact us.