At a time when taxes in Britain are at the highest levels since the Second World War, there was relatedly high expectations for the Autumn Statement, however, despite the 2 percentage point cut to national insurance, the fact still stands.
Within the 110 changes announced, there were five larger, headline-worthy adjustments that were made.
The first of these was the pension triple lock, a government pledge that the state pension will increase by either average earnings growth, CPI) or 2.5 per cent, whichever is higher.
This year wage growth including bonuses was high at 8.5 per cent, making this an expensive commitment for government coffers.
There had been speculation the chancellor might decide to peg the triple lock to regular earnings excluding bonuses, as NHS and civil service bonuses have skewed the figures.
This would have brought the increase down to 7.8 per cent, but instead he opted to honour it at 8.5 per cent.
The aforementioned national insurance cuts from 12 per cent to 10 per cent will start from the from January 6, 2024. The chancellor commented that this is the largest ever cut to personal tax.
Employees pay 12 per cent on earnings between £242 and £967 per week. A salary of £967 a week equates to £50,284 a year, so employees earning at this level or above pay £4,524 a year in national insurance.
The cut to 10 per cent will save this group £754 a year. But employees will still pay 2 per cent on all earnings above £967 a week. Self-employed people could benefit from the scrapping of Class 2 NICs and a cut in Class 4 NICs from 9 per cent to 8 per cent, which the chancellor said would save them £350 a year from April.
The third big announcement was the 'Pot for Life’ - the government plans to launch a consultation on ‘pot for life’ reforms which would give workers the right to nominate the pension scheme into which they want their employer to pay contributions.
With the average worker having 11 jobs during their working life, the idea of this change is to reduce proliferation of lost and forgotten small pots and give people more control over their pension savings.
However there are concerns around the burden this could place on employers and payroll administration by creating a situation in which they’re making contributions into multiple pension pots.
The chancellor also delivered on some minor Isa reforms, although no adjustment to the total allowances. From April, individuals will be able to subscribe to multiple Isas of the same type every year - provided the maximum Isa allowance isn't breached.
Partial Isa transfers between providers will also be allowed. However, it remains to be seen whether this will be honoured by all Isa providers as it would require significant changes to their systems.
People will be able to invest in Long Term Asset Funds through the Innovative Finance Isa from April. An LTAF fund allows wider access to assets such as infrastructure and private companies which are not regularly traded on stock exchanges.
This change may enhance diversification for savers but the risk of illiquidity (meaning not being able to sell investments quickly) could be an issue so this is only for those prepared to tie up their money for an extended period.
