Autumn Statement – How does it affect you?

Jeremy Hunt has announced his Autumn Statement, the first financial package since Rishi Sunak moved into No. 10. This Budget is about essential tax changes to restore the Government’s finances and they affect all areas of financial planning. How does the Autumn Statement affect you?

Read our latest insight to find out more about the key changes affecting pensions, personal taxes, investments and property.

How does the Autumn Statement affect my Pension?

The State Pension “triple lock with be honoured. Under the “triple lock”, the State Pension increases each year by the higher of:

• Inflation, as measured by the Consumer Price Index (CPI) in September (of the previous year)
• The average increase in wages across the UK
• or 2.5%.

Those in retirement can expect a boost of just over 10% to their State Pension from April 2023. For someone on the full, new State Pension, that will represent an additional payment of more than £900 a year. Pension Credit will also rise by 10.1% in April 2023 and benefits will be uprated by inflation, too.

For more information about how the Autumn Statement affects your pension and retirement planning please get in touch.

How does the Autumn statement affect tax allowances?

The chancellor announced reductions to Capital Gains and Dividend Tax.

Capital Gains Tax
The Capital Gains Tax (CGT) annual exempt amount will fall from £12,300 to £6,000 in April 2023, and to £3,000 in April 2024. This means that you will only be able to make profits of £6,000 on non-ISA investments – such as company shares or second homes – in the 2023/24 tax year before CGT becomes due.

Dividend Tax
The Dividend Allowance – the amount you can earn from dividends before Dividend Tax is paid – will be reduced from £2,000 to £1,000 in April 2023, and then to £500 in April 2024.
If you receive any income from dividends, it’s likely that you will pay more tax on these dividends from April 2023 onwards.

If you are unsure or  have further questions about how these changes will affect your personal investments please get in touch. Our wealth management advisers will be able to advise you on your individual circumstances.

How does the Autumn Statement affect Inheritance Tax?

The Inheritance Tax (IHT) nil-rate band has been at its current level of £325,000 since April 2009. The additional residence nil-rate band is set at £175,000 and normally applies if you leave your home to a child or grandchild. The threshold will now remain at these levels until at least 2028.

Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an IHT liability.

As house prices and asset values rise, it is likely that more and more estates will face an IHT bill over the next five years. If you have concerns about your wealth and taking financial care of your family. We have specialist Trust and tax knowledge to guide you through this complex area of Inheritance Tax and gifting to ensure you have full confidence that your loved ones will benefit from your legacy. Please get in touch if you have any questions.

How will the Autumn Statement affect my Income Tax?

Hunt reduced the threshold at which individuals pay additional-rate Income Tax. Which means higher earners will pay 45% tax on more of their earnings.

The 45% rate will now apply for earnings above £125,140 rather than the previous level of £150,000. It means if you earn £150,000 or more, you will pay just over £1,200 more in Income Tax each year.

Income Tax Personal Allowance frozen – the amount an individual can typically earn before paying Income Tax – at the current level of £12,570 until 2028. Additionally frozen, the higher-rate threshold at £50,270 and the National Insurance thresholds at their current level to 2028.

Tax planning only ever gets more complicated and that is why we are here to help. Please do not hesitate to contact us to arrange a free, no obligation meetings to talk through your personal circumstances with an independent adviser.

Need to ask a question?

If you have any questions about how the autumn statement will affect you and your personal or business finances, please get in touch. We provide a free, no obligation consultation to enable you to gain confidence in your financial planning. Call 01244 347 583 or email enquiries@innesreid.co.uk to book your meeting.

 

Autumn Statement – How does it affect you? This article is not personal advice. If you are unsure what is right for you, please seek personal financial advice. This article is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.  Please obtain professional advice before entering into or altering any new arrangement.

Source: Gov.uk  Autumn Statement HM Treasury

 

 

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