On 17 November 2022, Jeremy Hunt delivered an autumn statement built on £55 billion of spending cuts and tax increases. 

After a difficult summer for the Conservative Party – followed by an autumn notable for the economic fallout of the mini-Budget – the fourth chancellor of the year had a tough job. 

With inflation at a 41-year high, the pound faltering and a recession on the way, Jeremy Hunt was looking to reinstall confidence in the markets and plug an economic blackhole of the party’s own making.

So, what was announced? And what will the changes mean for your pension, energy costs, and tax bill over the winter and into the new year?

Keep reading to find out.

“Winners” include those claiming the State Pension

One headline-grabbing announcement was the decision to honour the State Pension triple lock. This 2019 manifesto promise – temporarily ditched during the coronavirus pandemic – ensures that the State Pension keeps pace with the cost of living.

It does this by guaranteeing to raise the annual payment each year by the higher of:

• The Consumer Price Index (CPI)
• Average wage growth
• 2.5%.

While it was a quirk of the “furlough” scheme that led to the triple lock being suspended during the pandemic, it was inflation that threatened to derail it this time. 

The CPI for September 2022 (the figure used to calculate April 2023’s rise) was well above average wage growth and 2.5%. In fact, it stood at 10.1%.

This marks a costly rise for the government, hence the interest in Hunt’s announcement. 

If you currently receive the full new State Pension, your payments will increase from £185.15 to £203.85 a week. That’s a rise from £9,627 a year to £10,600, an increase of more than £900.

Autumn statement “losers” include those struggling with household energy bills

Your energy bill will likely rise from April 2023 thanks to changes announced by Jeremy Hunt.

Liz Truss introduced the Energy Price Guarantee during her short tenure at Number 10. A response to rising energy bills resulting from soaring inflation and exacerbated by Russia’s invasion of Ukraine, the measure “capped” the average household bill at £2,500 a year.

Originally intended to last for two years, this was quickly slashed to just six months, with the promise of further reviews. 

Hunt used his autumn statement to confirm the cap’s future. 

The Energy Price Guarantee will remain in place, at £2,500, until April 2023. After that date, it will rise to £3,000 – meaning you will be paying more for your energy – until April 2024. The chancellor confirmed that this amounts to around £500 of support for the 2023/24 tax year. You will, though, still be paying significantly more than you were last winter.

Be sure to contact us if you’d like help managing your household budget to account for these additional costs.

Other “losers” include high earners and those close to the Inheritance Tax threshold

Allowance drops and extended freezes mean that your tax bill could rise if you are a high earner. You’ll also need to think carefully about how you manage your estate. 

Tax cuts will see you worse off

Jeremy Hunt announced several tax cuts, including to:

• The Capital Gains Tax (CGT) annual exempt amount, which falls from £12,300 to £6,000 in April 2023, and to £3,000 in April 2024. 
• The Dividend Tax Allowance, which will fall from £2,000 to £1,000 in April 2023, and to £500 in April 2024.
• The level at which Income Tax becomes payable at 45%, which drops from earnings of £150,000 to just £125,140.

The Inheritance Tax nil-rate band freeze is extended

Rishi Sunak used his 2021 Spring Budget to freeze the Inheritance Tax (IHT) nil-rate band and the residence nil-rate band. They were frozen at £325,000 and £175,000 (though the former level has been in place since April 2009) until at least 2026.

This freeze has now been extended until at least 2028.

As house prices and the value of your investments rise over the next five years, managing your estate will become increasingly important. 

Get in touch

With £55 billion of tax rises and spending cuts, the autumn statement means tough times ahead for many.

If you are worried about the impact of any of Jeremy Hunt’s announced changes or you would like to discuss any element of your financial plans, please email enquiries@futureplanningwm.co.uk or call 01793 575553.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.