Jeremy Hunt made his 2023 Autumn Statement this afternoon, sharing the government’s plans for taxes, benefits, pensions and more. Our blog explains what these changes will mean for you.  

National Insurance cuts

The government announced that the National Insurance (NI) rate will be cut by 2% from 6 January 2024. This affects around 29 million workers under the State Pension age earning more than £242 a week. 

This means that for someone on the National Living Wage working 40 hours a week, they would save £182 a year before the minimum wage goes up in April, or £224 the year after that.  

For someone earning £30,000, it means they’ll take home £348 more per year.  And for someone with a £50,000 salary, they’ll be £748 better off.  

Self-employed National Insurance cuts

From April 2024 self-employed people earning profits above £12,570 will no longer need to pay Class 2 NI contributions. This will save around £192 a year. They will still be able to access welfare benefits and build up entitlement to State Pension.

Anyone earning profits of between £6,725 and £12,570 will have still get National Insurance Credits towards benefits and entitlements even if they don’t pay NI. Anyone earning less than £6,725 can continue to pay voluntary Class 2 NICs as can anyone else who wishes to do so. 

The rate of Class 4 National Insurance contributions has also been cut by 1%. This will save self-employed people on average earnings of £28,500 a year around £350 in 2024-25. 

Minimum wage rises 

The minimum wage is going up for all age groups in April 2024. Workers will also start to receive the National Living Wage two years earlier, as the age bracket for the National Living Wage has been reduced to 21. 

Apprentices and 16 and 17-year-olds got the biggest increase, with an hourly pay bump of more than 20%. 

The new hourly rates are: 

Benefits boosted  

The chancellor has promised a 6.7% increase for working aged benefits from April 2024. This includes:

• Universal Credit
• Jobseeker’s Allowance
• Employment and Support Allowance (ESA)
• Other disability and sickness benefits. 

This applies to benefits in England, Wales and Scotland, Northern Ireland set their own benefits rates. Some disability benefits are set by the Scottish government, so these might be different. 

Local Housing Allowance uplift

The Local Housing Allowance is used to work out the maximum amount of benefits you can claim towards housing costs when you rent from a private landlord.  

This applies to both Housing Benefit and the housing element of Universal Credit. 

In today’s statement it was announced that from April 2024, the Local Housing Allowance will be restored to the 30th percentile of current rental values (equivalent to the rent charged in the bottom 30 per cent of properties in your local area).  

The Local Housing Allowance had been frozen against rental values set at 2020 levels but the rapid rise in rent prices means that many people have faced severe shortfalls, unable to meet their full rent costs. 

This means 1.6 million people will get an extra £800 a year on average in support towards their rent. Find out if you qualify for Local Housing Allowance and other support to help with rent in our section about Benefits to help with housing costs.

Tougher rules around out of work benefits 

From April, the rules for claiming benefits will be stricter. People are now expected to stay fully engaged in their search for work. This includes overcoming any barriers that are preventing them finding work and updating their skills.  

If they don't take these steps, they will face sanctions like compulsory work placements or lose their benefits completely. 

The State Pension will increase next year  

Jeremy Hunt announced today that the State Pension will go up by 8.5% in April 2024, making the new maximum allowance £221 a week. That’s an increase of around £900 a year.

Understand more about how State Pension works in our guide State Pension – an overview.

A new ‘pot for life’ for your workplace pension 

Today, the government also shared its proposal that by 2030 you’ll have the option of building a ‘pension pot for life’. You would have the right to ask your employer to pay into a pension scheme that you already have, instead of opening a new one. It could be one of your existing schemes. 

Having all your pensions in one place could make it easier to keep track of your retirement savings,  but remember when making this decision you should always take your circumstances into account and look carefully at the features of the pension schemes you plan to leave or join.