The Chancellor of the Exchequer’s Autumn Statement was not quite the tax-cutting bonanza some had hoped for. However, it did contain news that will affect you if you’re in retirement or about to retire shortly.
National Insurance
Above all else, this was a NI cutting budget for those still working. The reduction in the rate of NI from 12% to 10% will put some pennies back in the pocket for the employed. Equally, the abolition of Class 2 NI for the self-employed will help those who work for themselves.
Your State Pension
For those of you receiving State Pension, the good news is that the Triple Lock is staying (for now). The state pension will go up in April by 8.5%, a very welcome increase.
However, the Chancellor did not raise the tax-free threshold, currently frozen at £12,570. So if you have other pension income, remember that these increased pension payments will eat into your personal tax allowance. As a result, your tax code will change, and you may pay more tax on those additional pensions. This often catches people out!
Simpler Pensions and ISAs
There were some other rules brought in for simplifying small pensions and ISAs which was good to see.
Interest Rates
This isn’t a Budget thing, but a general observation about the amount of interest your savings may now be earning. At the time of writing, a 1-year fixed rate bond could earn as much as 5.65%, and an instant access account as much as 5.15%.
You may have a Personal Savings Allowance of £1,000 BUT this is dependent on the level of your income. As the Gov website says:
“You can use your Personal Allowance to earn interest tax-free if you have not used it up on your wages, pension or other income.”
In other words, you might have to start paying tax on your interest. See the Gov website for more details.
Inheritance Tax
The Chancellor was rumoured to be considering abolishing what has been dubbed the UK’s most despised tax. The government made much of the fact that IHT only affects 4% of families, but I would argue that the figure would be much higher if people hadn’t put estate planning provisions in place beforehand! But in the end, there was no change for Inheritance Tax rules which the Chancellor has said he will look at later next year. We shall see.
One for the grandkids
If your grandchildren are at the start of their working lives, and perhaps looking for a part-time job alongside studies, good news. The minimum wage will be increased by 10% from 1st April 2024, to £11.44 (for those aged over 21).
And there’s more
For more details of other Autumn Budget announcements, see this straightforward summary from Which?
Looking for help with your estate planning?
Contact us here at Panthera Estate Planning. You can book an appointment either as an online call or in person at our new office in Waterlooville, Hampshire.
