What to expect from Autumn Statement 2022 from tax to pensions – and what it means for your money
THIS week, the Chancellor will deliver his Autumn Statement – a budget that will have huge implications for your pocket.
It will be delivered in the House of Commons on Thursday (November 17) by Jeremy Hunt.
The Chancellor is looking to find up to £60billion to plug black hole in the public purse.
It is likely it will come from a a combination of tax hikes and spending cuts.
It comes after economists at the Resolution Foundation calculated that Liz Truss’s disastrous mini-budget exacerbated the problem.
Prime Minister Rishi Sunak recently admitted there will be “difficult decisions” ahead.
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Here are the measures that could be announced when Mr Hunt delivers the autumn statement.
Freeze tax thresholds
Rishi Sunak and Jeremy Hunt are expected to extend a freeze on the thresholds at which people start to pay the different rates of income tax.
The freeze was originally supposed to end in 2026.
This could result in more people being dragged into higher tax bands.
That is because rising wages will see more workers hit the thresholds, even though they are no better off in real terms.
The basic rate of income tax currently kicks in on earnings over £12,571, and the 40p higher rate at £50,271.
This sneaky stealth tax is expected to bring in £30 billion a year by 2026.
A stealth tax is form a tax collected in a way that isn’t obvious – and you might not even notice it.
While the government doesn’t change the headline rate, you end up paying more money.
Tax thresholds would usually be tweaked to take into account inflation and rises in earnings.
High earners income tax
Mr Hunt is mulling a shock tax raid on the rich that would see tens of thousands of extra high earners slapped with the top rate.
The £150,000 threshold at which the additional rate of income tax kicks in could be lowered and that rate of 45p in the pound even raised.
It would mark a spectacular change in direction just six weeks after Ms Truss tried to reduced it to 40p and would break a key 2019 Tory manifesto pledge not to raise income tax.
Windfall tax
The Chancellor is eyeing a fresh windfall tax grab on the eye-watering profits being made by energy giants.
The PM himself introduced the current 25 per cent levy as Chancellor to raise £7billion this year and £10billion next year.
Demands for a deeper levy flared as Shell posted profits of £8bn for just the last three months.
Mr Hunt is now expected to increase this to 35 per cent and extend the length of the new tax from 2025 until 2028.
It will also be extended to cover electricity generators.
Pension triple lock
The PM has hinted at keeping the pensions triple lock in the last few days.
With its safety previously called into question, MPs from all political parties have pleaded with Mr Hunt to keep the policy in place.
The popular triple lock sees pension payments increase in line with whichever of the following is highest:
- Earnings – the average percentage growth in wages in Great Britain
- Prices – the rising cost of living in the UK, as measured by the Consumer Prices Index (CPI)
- 2.5%
In what will potentially be a major win for pensioners, so far the triple lock seems set to stay.
While the plan has yet to be confirmed, Mr Sunak said pensioners are “at the forefront of my mind”, on his trip to the G20 in Bali.
Benefits uprate
The Chancellor is understood to be in favour of uprating benefits in line with inflation next April.
Alongside the pension triple lock, what to do with Universal Credit has been a major source of contention in Westminster.
Many Tory MPs have called for benefits and inflation to stay aligned, and Mr Sunak promised this himself when he was Chancellor earlier in the year.
As things stand it looks like that will go ahead.
Council Tax
Millions of Brits could be hit with higher Council Tax bills as Mr Hunt weighs up tough options for saving the economy.
Speaking at Treasury questions today, Mr Hunt appeared to confirm he is prepared to let local authorities increase Council Tax.
Usually councils have to hold a referendum to increase rates above 2.99 per cent – but the Chancellor is thinking of scrapping that rule.
But no final decisions have been made yet.
Energy bill support
Energy bills are currently frozen at £2,500 for the typical household under the energy price guarantee.
But after the fallout of the mini-Budget and concerns over rising government debt, Chancellor Jeremy Hunt said the guarantee will only last until April.
Millions have been left in the lurch wondering what will happen to bills when the guarantee ends next year.
It was reported that the government was discussing putting the price cap back in place from April.
But today, Mr Hunt said that the energy price support will not end from next April.
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He did not confirm what form the support will take, or if the energy price guarantee will remain in place.
The Chancellor added that he will be announcing in the budget what that support will be.