Autumn statement: Millions to pay more in tax as chancellor cuts top-rate threshold and lays out plan to plug ‘black hole’
Millions more Britons will pay more tax as Jeremy Hunt cut the top-rate threshold and announced freezes on several other taxes in his autumn statement.
The total amount of savings from the autumn statement has been costed at £55bn, through tax rises and cutting government spending.
However, in real-term costs, UK households’ disposable incomes will fall by 7.1% over the next two years – the lowest levels since records began in 1956/7, taking incomes down to 2013 levels, according to the independent Office for Budget Responsibility.
Britons face ‘staggering’ fall in disposable income – live autumn statement updates
Some of the main announcements:
• Higher rate of tax threshold reduced to £125,140
• Benefits and state pension to rise in line with inflation
• Windfall tax extended to March 2028 and increased to 35%
• Electric cars no longer exempt from road tax from April 2025
• An extra £2.4bn per year on schools
• NHS to get £3.3bn and adult social care £1bn next year and £1.7bn in 2024
• Freeze on income tax personal allowance, national insurance and inheritance tax thresholds
• Minimum wage increases to £10.42 an hour
• Social housing rent increases capped at 7% from next year.
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Key announcements from the autumn statement
Jaw-dropping change of tack by Jeremy Hunt – analysis
The chancellor said the government is introducing two new fiscal rules: that underlying debt must fall as a percentage of GDP by the fifth year in a rolling five-year period: and public sector borrowing over the same period must be below 3% of GDP.
He said he had “tried to be fair” in his decisions by asking those “with more to contribute more” and avoided tax rises that “most damage growth”.
Mr Hunt promised to “protect the vulnerable” and said his plan to plug what he previously called a fiscal “black hole” will lead to “a shallower downturn and lower energy bills”, while revealing his three priorities: “stability, growth and public services”.
But opposition parties and unions have accused the chancellor of holding the country back, with Labour saying the plan means “working people are paying the price” for the Tories’ “failure”.
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’12 weeks of Conservative chaos’
Higher tax rates for the wealthiest and energy companies
The chancellor said the 45p higher rate of tax will now be payable from £125,140, as opposed to the current £150,000.
He said those earning £150,000 or more will now pay just over £1,200 more a year.
Mr Hunt also expanded and increased the windfall tax, so from 1 January 2023 until March 2028 energy giants will have to pay 35%, instead of the current 25% on their profits.
And there will be a temporary new 45% levy on electricity generators, which is in addition to the tax on the companies that provide energy to households and businesses.
He also said electric car owners will no longer be exempt from vehicle excise duty from April 2025.
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And he announced the government, as expected, will proceed with the building of the new Sizewell C nuclear plant in Suffolk, which will create 10,000 highly skilled jobs and provide energy to the equivalent of six million homes over 50 years.
However, there was no mention of fuel duty in the statement, as the law means it goes up by the Retail Price Index – which is set to be 23% in March next year.
The OBR said that would add £5.7bn to the government coffers and would be a “record cash increase” and the “first time any government has raised fuel duty rates in cash terms since 1 January 2011, with an expected rise of around 12p a litre on petrol and diesel.
It is understood the government is not making a decision on fuel duty now but will in the spring budget next year.
Extra cash for schools and the NHS
Much of the chancellor’s statement had been pre-briefed following the economic turmoil the mini-budget created after his predecessor announced surprise unfunded tax cuts.
But Mr Hunt did pull a rabbit out of his hat as he announced an extra £2.3bn each year will be invested in schools for the next two years.
As was expected, he increased the NHS budget by £3.3bn and said he has asked former Labour health secretary Patricia Hewitt to advise on how to make sure the new Integrated Care Boards work properly. They were introduced in April and are aimed at bringing NHS services in local areas together.
Adult social care will get £1bn more next year and £1.7bn in 2024 and he said altogether, along with previous commitments, that means the government is committing to a “record £8bn” package for the health and social care system.
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‘£8bn package for health and social care’
‘Stealth taxes’
There will be a freeze on income tax personal allowance, the main National Insurance thresholds and inheritance tax thresholds for a further two years, until April 2028.
These have been branded “stealth taxes”, with the freeze on income tax to bring in £6.8bn for the government as more people will be pushed into a higher tax bracket.
On personal income allowances, he said the dividend allowance will be cut from £2,000 to £1,000 next year then to £500 from April 2024.
The annual exempt amount for capital gains tax, which is paid on the profit of selling an asset that has increased in value such as property, will also be cut from £12,300 to £6,000 next year then to £3,000 from April 2024. It means people will have to pay tax at a lower threshold than before.
Cost of living and minimum wage help
On help for energy bills, Mr Hunt said the Energy Price Guarantee will continue for a further 12 months from April 2023 at a higher level of £3,000 per year for the average household. It is currently capped at an average of £2,500.
There will also be additional cost of living payments next year for the most vulnerable, with £900 for households on means-tested benefits, £300 for pensioner households and £150 for those on disability benefits.
Social housing rents will have their increases capped at a maximum of 7% in 2023-24, he added.
And the hourly minimum wage will increase by 9.7% from April next year to £10.42 from the current £9.50.
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Energy price cap to rise again in 2023
Pensions and benefits rise
Mr Hunt committed to maintaining the triple lock on pensions, which promises to increase the state pension each year in line with the highest of inflation, average earnings or 2.5%. At the moment, that is inflation which reached a 41-year high on Wednesday of 11.1%.
From April, pensions will rise in line with inflation of 10.1%, meaning an £870 annual increase.
Benefits will also rise in line with inflation while a further 600,000 people on Universal Credit will be made to meet with a work coach to get more people into the workforce and in better-paid jobs.
Defence and overseas aid
Defence Secretary Ben Wallace had previously said he would quit if the government did not stick to spending 3% of GDP on defence by 2030.
He has tempered his tone since as the economy dived but will have been disappointed by Mr Hunt announcing he is committing to “at least 2%”.
On overseas aid, the chancellor said it will remain at 0.5% as he said the “significant shock to public finances” means it will not be possible to return to the 0.7% target.
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Police investigating criminal offence after Daily Telegraph columnist ‘dumbfounded’ by social media post probe
Essex Police say they are investigating an alleged criminal offence of inciting racial hatred, after Daily Telegraph columnist Allison Pearson said she was “dumbfounded and upset” when officers knocked on her door last Sunday.
Ms Pearson revealed she was told she was being investigated over a year-old deleted post online.
She said she wasn’t informed which post had been reported, but suggested it could have been related to the 7 October attacks in Israel or pro-Palestine marches.
She claimed the officers told her she was being investigated for a NCHI (a none crime hate incident) an incident involving an act which is perceived to be motivated by hostility or prejudice towards persons with a particular characteristic, but is not illegal.
NCHI reports have long been controversial, with many citing free speech concerns, and Ms Pearson’s account of the police visit has led to widespread support from Conservatives and online commentators, including Tory leader Kemi Badenoch.
But an Essex Police spokesperson has told Sky News its investigation was never for an NCHI, and that the matter was always being treated as an investigation into an alleged criminal offence of inciting racial hatred.
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Speaking on her Planet Normal podcast on Wednesday, Ms Pearson said she found the visit “chilling”.
“I was dumbfounded, upset, it’s not very nice,” she said. “I was in my dressing gown on the step of the house, these two coppers were there just outside the door.
“There were people gathering for the Remembrance Day parade so there were people watching from the other side of the road.
“Whatever I did or didn’t tweet, if somebody found it offensive, that to me is still not a reason for two policemen to come to my house on a Sunday morning.
“You know, they don’t do that for burglars, do they? We know policing is under-resourced and they are unable to attend often quite serious crimes.
“This was the most extraordinary overreach and state intrusion into my private life and I don’t think I did anything wrong and I think their response was outrageous.”
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In a statement, Essex Police said: “Officers attended an address in Essex and invited a woman to come to a voluntary interview.
“They said it related to an investigation into an alleged offence of inciting racial hatred, linked to a post on social media.
“For clarity: a complaint of a possible criminal offence was made to the police and this is why we called; to arrange an interview.
“Everyone was polite and professional throughout the brief conversation.”
They said an officer told Ms Pearson: “It’s gone down as an incident or offence of potentially inciting racial hatred online. That would be the offence.”
Essex Police say they have complained to the Independent Press Standards Organisation (IPSO) over what they call “false reporting” regarding the ongoing investigation.
In an interview with The Telegraph published yesterday, Kemi Badenoch said police visiting a journalist over a social media post was “absolutely wrong” and that “we need to look at the laws around non-crime hate incidents”.
“There has been a long-running problem with people not taking free speech seriously,” she said.
She challenged the prime minister to review the laws, saying: “Keir Starmer says he is someone who believes in these things. Now he needs to actually show that he does believe it. All we’ve seen from him is the opposite.”
Ms Badenoch added: “We need to stop this behaviour of people wasting police time on trivial incidents because they don’t like something, as if they’re in a nursery.
“It’s like children reporting each other. And I think that in certain cases, the police do it because they’re afraid that if they don’t do it, they will also be accused of not taking these issues seriously.”
Essex Police said the officers went to the address to invite Ms Pearson to attend a voluntary interview as part of their investigation, which was passed to them by another force.
“The report relates to a social media post which was subsequently removed,” the statement read.
“An investigation is now being carried out under Section 17 of the Public Order Act.”
Essex Police also said they made attempts to contact Ms Pearson before the visit.
Other prominent Conservative voices such as Boris Johnson, Liz Truss and Chris Philp have also leapt to Ms Pearson’s defence online, as has X owner Elon Musk, who quoted a post about the incident and said: “This needs to stop.”
Police commentator Graham Wettone told Sky News the police are “duty bound to investigate allegations of crime”.
“They’ve had an allegation of crime made there,” he said. “They will investigate it. If at the end of this they decide that no criminal offence has been committed – and we’re not at that stage yet – then it can still be recorded as a none crime hate incident.”
The police, he said, are duty bound to keep a record of none crime hate incidents.
“Parliament said they want the police to do this, to investigate and record incidents like this. So they are doing exactly what parliament and society asked them to do, and they are getting criticism for doing what people want.”
UK
Sir Keir Starmer vows to defend budget decisions ‘all day long’ as farmers slam ‘disrespectful’ PM
Sir Keir Starmer has said he will defend the decisions made in the budget “all day long” amid anger from farmers over inheritance tax changes.
Chancellor Rachel Reeves announced last month in her key speech that from April 2026, farms worth more than £1m will face an inheritance tax rate of 20%, rather than the standard 40% applied to other land and property.
The announcement has sparked anger among farmers who argue this will mean higher food prices, lower food production and having to sell off land to pay for the tax.
Sir Keir defended the budget as he gave his first speech as prime minister at the Welsh Labour conference in Llandudno, North Wales, where farmers have been holding a tractor protest outside.
Sir Keir admitted: “We’ve taken some extremely tough decisions on tax.”
He said: “I will defend facing up to the harsh light of fiscal reality. I will defend the tough decisions that were necessary to stabilise our economy.
“And I will defend protecting the payslips of working people, fixing the foundations of our economy, and investing in the future of Britain and the future of Wales. Finally, turning the page on austerity once and for all.”
He also said the budget allocation for Wales was a “record figure” – some £21bn for next year – an extra £1.7bn through the Barnett Formula, as he hailed a “path of change” with Labour governments in Wales and Westminster.
And he confirmed a £160m investment zone in Wrexham and Flintshire will be going live in 2025.
‘PM should have addressed the protesters’
Among the hundreds of farmers demonstrating was Gareth Wyn Jones, who told Sky News it was “disrespectful” that the prime minister did not mention farmers in his speech.
He said “so many people have come here to air their frustrations. He (Starmer) had an opportunity to address the crowd. Even if he was booed he should have been man enough to come out and talk to the people”.
He said farmers planned to deliver Sir Keir a letter which begins with “don’t bite the hand that feeds you”.
Farmers’ tractor protest outside the Welsh Labour conference in Llandudno, North Wales
Mr Wyn Jones told Sky News the government was “destroying” an industry that was already struggling.
“They’re destroying an industry that’s already on its knees and struggling, absolutely struggling, mentally, emotionally and physically. We need government support not more hindrance so we can produce food to feed the nation.”
He said inheritance tax changes will result in farmers increasing the price of food: “The poorer people in society aren’t going to be able to afford good, healthy, nutritious British food, so we have to push this to government for them to understand that enough is enough, the farmers can’t take any more of what they’re throwing at us.”
Mr Wyn Jones disputed the government’s estimation that only 500 farming estates in the UK will be affected by the inheritance tax changes.
“Look, a lot of farmers in this country are in their 70s and 80s, they haven’t handed their farms down because that’s the way it’s always been, they’ve always known there was never going to be inheritance tax.”
On Friday, Sir Keir addressed farmers’ concerns, saying: “I know some farmers are anxious about the inheritance tax rules that we brought in two weeks ago.
“What I would say about that is, once you add the £1m for the farmland to the £1m that is exempt for your spouse, for most couples with a farm wanting to hand on to their children, it’s £3m before anybody pays a penny in inheritance tax.”
Read more:
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Welsh farmer Gareth Wyn Jones
Ministers said the move will not affect small farms and is aimed at targeting wealthy landowners who buy up farmland to avoid paying inheritance tax.
But analysis this week said a typical family farm would have to put 159% of annual profits into paying the new inheritance tax every year for a decade and could have to sell 20% of their land.
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The Country and Land Business Association (CLA), which represents owners of rural land, property and businesses in England and Wales, found a typical 200-acre farm owned by one person with an expected profit of £27,300 would face a £435,000 inheritance tax bill.
The plan says families can spread the inheritance tax payments over 10 years, but the CLA found this would require an average farm to allocate 159% of its profits each year for a decade.
To pay that, successors could be forced to sell 20% of their land, the analysis found.
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