The Government has announced a new set of measures that will affect the finances of working people.
UK Chancellor Jeremy Hunt has delivered the Autumn Statement, the Government’s first financial announcement of Prime Minister Rishi Sunak’s tenure.
Beforehand, the Chancellor had warned of “difficult decisions” as the cost of living crisis continues to take its toll on the British public. The statement included several measures that will affect Police Officers and working people across the UK, featuring tax hikes and spending cuts worth billions.
What the announcement means for you
Changes to tax
The Chancellor announced plans to consolidate £55 billion from spending cuts and tax rises. The threshold for the highest rate of income tax has been significantly reduced from £150,000 to £125,140, bringing more taxpayers into the top bracket.
The freeze on national insurance and income tax thresholds will now last until April 2028. This means your tax-free personal allowance will not rise in line with inflation and will remain at £12,570, with the higher-rate threshold of £50,270 in England, Wales and Northern Ireland.
In simple terms, changes to the rate of income tax mean that more people will have to pay more tax. The new tax thresholds are frozen until 2028, rather than moving in line with inflation. This means a promotion or pay rise could force you into a higher bracket.
Many members of the Police Service will be affected by these changes, depending on your rank and earnings. You also need to take into account any added opportunities for overtime, promotions and inflationary pay rises. To see if you’ll need to pay more tax, check Metfriendly’s 2022/23 Police Pay Scales Guide.
The announcement also unveiled plans to further reduce the allowance for tax-free dividends, with the already heavily decreased value of £2,000 to be halved in 2023. From April the following year, it will be cut again to £500. As such, if you own investments outside of an ISA or SIPP, you could find yourself paying more tax. The dividend tax will not apply to any investments held within a Lifetime ISA, Stocks and Shares ISA, Junior ISA or Pension.
The Government will be extending the windfall tax on oil and gas firms from January 2023 to March 2028, with energy giants having to pay 35% of profits. The Chancellor also announced a temporary 45% levy on electricity generators from January 1st, aiming to raise £14 billion next year.
Energy bills
The energy price guarantee, outlined to help families deal with soaring energy bills, will continue. Although, the aid you receive will not be as generous as previously laid out.
From April, the cost of energy bills will increase by hundreds of pounds for the typical British household. This means that a home using an average amount of gas and electricity will pay £3,000 a year, a £500 rise from the previous guarantee. The scheme will run for 12 months.
The Chancellor also revealed a new target to cut energy demand by 15% and form an energy efficiency task force. This will include £6 billion of funding towards insulation and other measures to promote efficient use of energy.
If you use alternative methods such as oil or liquefied petroleum gas (LPG) to heat your home, you will receive an additional £200 support package, double the £100 previously offered.
Pensions
The Chancellor confirmed that both pensions and benefits will rise in line with inflation, meaning both will receive a 10.1% boost.
The Government will fulfil its pledge to maintain the state pension triple lock. From April 2023, this will represent the largest increase ever, with millions benefitting from an approximate £880 per person.
Despite speculation that the Government would be implementing changes to the lifetime allowance (LTA), annual allowance and tax relief, pension legislation remains untouched following the Autumn Statement. This means that the freeze on the pensions LTA will continue as planned at £1,073,100 until April 2026.
Social care
The Chancellor announced plans to increase spending on social care in the Autumn Statement, raising the total investment by £2.8 billion in 2023 and up to £4.7 billion in the following year. The Government also revealed that the NHS budget would increase by £3.3 billion across each of the next three years.
From October 2023, an £86,000 lifetime cap on social care will be introduced. This means that you, or anyone else in England, won’t have to spend more than that amount on personal care in your lifetime. This cap also applies to where you might receive that care at home as opposed to in a hospital.
Cost of living payments
The current support measures for energy bills have been redirected towards the lowest-earning households. Consequently, the universal £400 payment you will have already received to help with the cost of bills this winter has been confirmed as non-recurring, although if you are eligible for means-tested benefits or universal credit, you’ll be set to receive a one-off £900 payment.
Stamp duty thresholds
The Autumn Statement maintained the previous mini-budget plans to cut the amount of stamp duty paid when people buy a property in England and Northern Ireland. No stamp duty will be paid on the first £250,000 of all property purchases and, for first-time buyers, none on the first £425,000.
The Chancellor noted that this will be a temporary change and hopes it will create “an incentive to support the housing market and the jobs associated with it.”
Stamp duty is calculated as a percentage of the total cost of a property and remains as follows:
- 0% on property purchases up to £250,000 (£425,000 if you’re a first-time buyer)
- 5% of purchase price between £250,000 and £925,000
- 10% of purchase price between £925,000 and £1,500,000
- 12% of purchase price over £1,500,000
What support is available to you?
The Autumn Statement comes at a time when Police Officers, Staff and the wider workforce are facing overwhelming financial stress. The cost of living crisis has been felt by millions across the UK with food, fuel and other necessities becoming more and more difficult to manage.
These concerns were highlighted in the results of Metfriendly’s Police Family Finance Index. Over 80% of respondents aged between 25 – 54 said they had felt financial concerns recently, more than a quarter of respondents aged 35 – 44 had gone without food in the last 12 months due to a lack of money and almost one in ten people aged 35 – 54, or a family member, have accessed a food bank in the last 12 months.
In these difficult times, it’s crucial to know that you’re not alone and there are various ways you can get help with your finances. Take advantage of a wide range of measures to help you budget your food spending and find out about some effective ways to make sure you’re stretching your money when it comes to food shopping.
Additionally, make the most of every opportunity for support. From free Government money to savings products like the Metfriendly Lifetime ISA, take a look at the options available to you.
It’s imperative that you fully understand your take-home pay and any deductions from it. Take a look at our 2022/23 Police Pay Scales Guide to keep yourself informed about salaries across all ranks and pay points, as well as our guide to the Police payslip.
We’re here to support you, so if you’d like to talk to us about Metfriendly savings products and explore your options, book a telephone or video call one-to-one with one of our financial experts.
ART-2022-015 (18/11/22)
