On Wednesday 22nd November, Jeremy Hunt, Chancellor of the Exchequer, delivered The Autumn Statement.

Here is a quick summary, focussing mainly on the changes made to pensions, National Insurance contributions and ISAs.

Pensions

State Pensions

The State Pension will rise 8.5% in April 2024 keeping inline with the triple lock policy. This will see the weekly payments rise from £203.85 to £221.20 for anyone qualified to receive the full amount.

What is the triple lock?

The pension triple lock is a UK government policy that ensures the state pension increases annually by the highest of three measures:

–          inflation (as measured by the Consumer Prices Index),

–          average earnings growth,

–          or a minimum of 2.5%.

This policy was introduced to protect the purchasing power of pensioners and provide them with a guaranteed yearly increase in their state pension. The triple lock mechanism aims to keep the state pension in line with the rising cost of living or wage growth, whichever is higher, thereby offering a degree of financial security to retirees.

Autumn Statement - State Pension Rise -2024

Lifetime Pension Provider Model

The statement again mentioned the continued push towards pensions being based around the individual not employer schemes.

In an ‘Open Call For Evidence’ document also published on 22nd November 2023, The Department for Work and Pensions looks to set a long-term vision for workplace pension saving in the UK. It explores the potential development of a lifetime provider model.

Under this model, each person could essentially have one pension for their entire life, instead of joining a different one each time they change employer.  You choose your pension provider and contribute into your plan throughout your working life.

On the surface, there appear to be a number of benefits including:

–          Less likely to lose track of old pensions

–          More cost effective (no need to pay charges on multiple pension pots)

–          Easier to make informed retirement decisions

More information about the call for evidence can be found here: https://www.gov.uk/government/calls-for-evidence/looking-to-the-future-greater-member-security-and-rebalancing-risk/looking-to-the-future-greater-member-security-and-rebalancing-risk#ca-ll

Or, you can read the Autumn Statement Pensions Reform 2023 document, here: https://www.gov.uk/government/collections/autumn-statement-pensions-reform-2023

Lifetime Allowance

The Pensions Lifetime Allowance (LTA), which is the maximum amount people can contribute to a pension pot without triggering tax charges, is on schedule to be abolished from 6 April 2024.

It is hoped that this change will encourage ‘ inactive individuals to return to work, in particular those aged 50 and above.

You can read more here: https://www.gov.uk/government/publications/abolishing-the-pensions-lifetime-allowance/abolition-of-the-lifetime-allowance

National Insurance Contributions

There were 3 key announcements relating to changes to National Insurance Contributions:

1) The main rate of Class 1 employee NICs will reduce from 12% to 10% from 6th January 2024 (for earnings from £12,570 up to £50,270 per annum)

2) Class 2 self-employed NICs to be scrapped from 6th April 2024.
Individuals with profits less than £6,725 per annum can continue to pay voluntary contributions if they wish to receive benefits such as the state pension in the future.

3) The main rate of Class 4 self-employed NICs (paid based on profits between £12,570 and £50,270) will reduce from 9% to 8% from 6th April 2024.

Changes of this nature provide an ideal opportunity for you to invest the money you would have paid out. If you would like to discuss the options available to you, please book a free discovery call by clicking the button below:

Class 1 NICs

ISAs

The following changes were announced to Individual Savings Accounts (ISAs) with effect from 6th April 2024:

  • You will be able to invest in multiple ISAs of the same type, with different providers as long as you remain within your ISA allowance limit.

  • You will be able to make partial transfers of ISA funds between providers ‘in-year’

  • The minimum age required to open an Adult ISA will increase from 16 to 18 (under 18’s will still be able invest in a Junior ISA).

  • The requirement to reapply annually for an existing dormant ISA is being withdrawn.

  • Open-ended Property Funds and Long-Term Asset Funds will be permitted investments in the Innovative Finance ISA.

ISA investment limits remain unchanged.

In Summary

This is selection of some of the key changes made by the Chancellor. For more information, the policy paper ‘Autumn Statement 2023 – Overview of the tax legislation and rates’ which sets out the detail of each tax policy measure announced, is available to read here:

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