Autumn Statement Summary
The Chancellor of the Exchequer, Rishi Sunak, delivered his Autumn Statement today. This was not a "proper" Budget; which this year took place on 3rd March (for a reminder of the announcements from this year's Budget, see our summary here). The Autumn Statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility (OBR).
As always, there has been speculation in the media about what might be announced, with the usual predictions being wheeled out as always, including Capital Gains Tax increases, Fuel duty increases, alcohol duty increases, capping of pension tax relief, IHT changes to name a few of the usual things. None of these were announced. Maybe if the media predict some things for long enough then one day they'll come true, but for now, here's a summary of what was announced.
Spending review 2021
The Spending Review 2021 sets Government departmental budgets up to 2024/2025. Every department’s overall spending will increase in real terms.
Taxes, pensions and benefits
Confirmation of the introduction of the Health and Social Care Levy, the 1.25% increase to Class 1 (employee and employer) and Class 4 (self employed) NI contributions from April 2022. From April 2023 the Levy is to be separated from other NI contributions.
Confirmation of the 1.25% increase to all dividend tax rates from April 2022.
Confirmation of the suspension of the State Pension ‘triple lock’ in 2022/2023. State Pensions to be uprated by the higher of CPI or 2.5%.
National Living Wage to increase to £9.50 an hour from £8.91 an hour from April.
Universal Credit taper to reduce from 63% to 55% by 1 December 2021.
CGT property payment window to be extended from 30 to 60 days from today for individuals to report and pay CGT after selling UK residential property.
Savings starting rate threshold and ISA subscription limits to remain unchanged in 2022/2023.
Arrangements to be introduced from 2025/2026 to make top-up payments into pensions for low-earning individuals who are in schemes that use the net pay arrangement.
Consultation to be launched on further changes to the charge cap for DC auto-enrolment pension schemes to enable individuals to benefit from better growth in their long-term investments.
Confirmation of increase to Corporation tax to rise to 25% in April 2023 on profits over £250,000.
Business rates review completed. Changes include freezing of the multiplier, introduction of new reliefs and revaluations to be done every three years.
New system of alcohol duties to be introduced in 2023.
No increase to alcohol or fuel duties.
First grants announced from the Levelling Up Fund for towns and cities including Stoke, Leeds, Doncaster and Leicester.
Increased investment to support London-style public transport across English regions.
Increased investment in roads and railways to improve journey times between cities.
OBR economic forecasts
Charter for Budget Responsibility updated with new fiscal rules:
underlying public sector net debt should be falling as a percentage of GDP; and
in normal times the Government should only borrow to invest.
OBR expects the size of the economy to be back at pre-pandemic level at the start of 2022.
Public sector net borrowing
NS&I Green Bond
Not an announcement from today, but from the March Budget was the introduction from National Savings and Investments of a "Green Bond". Few details were given at the time although the rate was announced just a few days ago. With a rate of just 0.65% fixed for 3 years, it certainly doesn't warrant an article in its own right; so it's mentioned here for completeness. Unlike the 65+ bonds of 2015, I wouldn't expect a stampede from savers to open one of the new accounts.
No significant changes at this stage from a Financial Planning perspective but then, being just an Autumn Statement, I wouldn't expect there to be. As always, we'll take into account the latest developments in our ongoing Forward Financial Planning. However if you have any immediate questions or concerns, please get in touch.
Michael Roberts FPFS
Chartered Financial Planner and Director
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