Autumn statement in five charts: See how your salary is affected by tax changes
The chancellor announced that national insurance will be cut in January, as well as changes to pensions, benefits, and the minimum wage from April. Use our calculator to see how your personal finances are affected.
Wednesday 22 November 2023 18:22, UK
National insurance will be cut from 12% to 10% on employee earnings between 拢12,570 and 拢50,270.
This was one of the biggest announcements to come out of today's autumn statement, impacting around 27 million payroll employees across the UK.
A person earning the UK's average salary of £35,000 will save £450 a year, or £37.38 a month, as a result of this change which is due to come into effect from January.
Paul Johnson, director of the Institute for Fiscal Studies, a leading independent economics research institute, welcomed the cut to national insurance (NI) as a way of putting more money in people's pockets, but pointed out that tax rates are still high in historic terms.
"Taxes on income and earnings are still much higher than three years ago. This undoes only a small fraction of the huge tax increase resulting from the freezing of income tax allowances and thresholds."
Since 2021/22 the government has frozen the amount of money you can earn tax-free, and before higher rates come into effect, rather than raising it with inflation. That means people are paying tax on a higher share of their income in real terms.
Use our calculator below to see how your tax bill will be affected:
This is a rough guide to what tax changes can be expected for most people, as there are other variables not included which might affect how much tax you pay including being in receipt of the blind person's allowance or the marriage allowance.
It also assumes you are self-employed and under pension age.
There were also national insurance cuts for the self-employed too, who the chancellor said "kept our country running during the pandemic".
This includes the scrapping of Class 2 contributions, as well as a reduction of the rate of Class 4 contributions from 9% to 8% for the £12,570 to £50,270 earnings bracket.
These will impact nearly two million self-employed people, according to the Treasury.
Benefits
Benefits are usually increased in April by the inflation rate for the previous September.
There was some speculation the chancellor planned to increase benefits by October's lower figure, but today it was announced to go ahead at a 6.7% uplift in line with the normal September-based rate.
It was also announced that the Local Housing Allowance would be unfrozen and increased to be in line with current rental prices at the 30th percentile (those at the cheaper end of the rental market, 20% lower than the average rent in the area).
This will be welcome news to many who are struggling to afford rent using the allowance which has been frozen at 2020 prices despite rent increasing at record levels since then, with all areas in England becoming unaffordable by last year.
The chancellor acknowledged that campaigners have been calling for unfreezing allowance as an "urgent priority".
Matthew Upton, acting executive director of policy and advocacy at Citizens Advice, said: "Talk to any of our frontline advisers and they'll tell you how big an issue housing costs are for the people we support.
"Today's announcement helps plug the often huge gap between Local Housing Allowance and the actual cost of renting.
"However, broader changes are needed too - the government's own data shows thousands of households will still struggle to find somewhere affordable to live. We need longer-term reform to ensure that everyone, no matter how much they earn, has a place to call home."
Pensions
One area where the government never fails to keep pace with inflation is pensions, where they are committed to a triple lock policy.
Pensions are uplifted by 2.5% or whichever has the biggest increase out of inflation and wages.
The chancellor announced he would honour this commitment, with pensions to rise 8.5% to £221.20 a week, in line with the increase in wages which grew fastest of the three potential benchmarks.
This is a gain of £3.70 a week had inflation been used, or £12.50 against the 2.5% minimum increase.
Angus Hanton, co-founder of the Intergenerational Foundation, a charity promoting intergenerational fairness, said the pension increase was another example of the government not prioritising working people.
"By increasing the state pension by almost 20% over two years, regardless of recipients' wealth, the chancellor has sided decisively with older generations against the young," he said.
"He has continued to harness fiscal drag to increase effective tax rates for workers, though slightly moderated by the cut in national insurance to 10%. This leaves most people paying 30-50% income tax, and more for students with loan repayments (effectively a graduate tax).
"At the same time he left wealth almost untaxed and unearned income free of national insurance."
Minimum wage to increase
The chancellor has accepted the Low Pay Commission's recommendation to increase the National Living Wage by 9.8% to £11.44 an hour.
The National Living Wage will now apply to everyone aged 21 and over, instead of 23 and over currently.
Read more:
How national insurance cuts will affect self-employed workers
Autumn Statement 2023: Top announcements from chancellor
The chancellor said that this will eliminate low-paid jobs by 2024, achieving a Conservative manifesto commitment.
Despite the tax cuts and payment increases for pensioners, workers, and those on benefits, cost of living challenges persist.
The Office for Budget Responsibility says that living standards overall are set to see their biggest fall since records began in the 1950s. By 2024/25 they are forecast to be 3.5% lower than pre-pandemic.
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.