How the Autumn Statement affects you

Philip Hammond recently delivered his first – and oddly enough, last – Autumn Statement as the Chancellor of the Exchequer.

That’s because, in a strangely meta twist, Mr Hammond abolished the Autumn Statement right in the middle of the Autumn Statement.

Instead, from 2017, we’ll have an Autumn Budget, and a Spring Statement in 2018, coupled with an update on growth figures.

Mr Hammond validated the decision by telling the House of Commons: “No other major economy makes hundreds of tax changes twice a year and neither should we.”

Right you are, Philip, but what real measures did he announce that will affect you over the coming years?

Fuel duty frozen

The amount of tax lumped on to the price of a litre of petrol and diesel will remain unchanged for the seventh year running.

This represents an annual saving of £130 for the average motorist and £350 for the typical van driver.

Don’t be fooled into thinking that the government is the nice guy here; tax already makes up around half of prices at the pump…

Insurance will rise

That fuel duty freeze is even less impressive when you learn that insuring your vehicle will cost more in 2017.

Insurance Premium Tax is set to rise from ten per cent to 12 per cent in June 2017, and that will affect home cover and other insurance products.

It marks the third time this tax has been hiked in 18 months and this latest rise will add £51 to the average household’s insurance bill.

There is a meagre silver lining though; the chancellor plans to curb whiplash claims, so that could cut car insurance premiums by about £40.

Home ownership push

Less than two in three Brits actually own their home, and a lack of homes on the market is pushing up house prices and forcing more people to rent.

The chancellor hopes to make homeownership more attainable by announcing a new £2.3 billion Housing Infrastructure Fund.

This will finance the construction of 100,000 new homes in high demand areas while a further £1.4 billion will build affordable homes.

Pay rises

Workers aged 25 and over could enjoy a minor pay rise in April when the National Living Wage is increased by 30p to £7.50.

Public sector workers will also receive a one per cent annual rise each year until 2019-20.

New savings bond launched

Around two million savers are set to benefit from the introduction of a new savings bond, boasting an interest rate of around 2.2 per cent.

It will require a minimum investment limit of £100 with an upper threshold of £3,000, and savers must put deposit money for three years. It is only open to those aged 16 or over too.

The best three-year bond currently on the market pays interest of 1.62 per cent.

This new bond will be available for 12 months from spring 2017, which allows enough time for interest rates elsewhere to increase, meaning this new savings bond’s appeal may be greatly diluted by the time it launches.

Pension recycle limit

There will be a cap placed on the amount of money people can ‘recycle’ in pensions from April 2017.

This practice refers to people who draw cash from their pension pot tax-free, then put some back to get extra tax relief.

The chancellor aims to clamp down on this by reducing the annual tax-free allowance from £10,000 to £4,000 from April 2017.

Only a small number of people are likely to be affected by the move but it could irritate people who need to deposit and withdraw from their pension pot flexibly.

Salary sacrifice sacrificed

Salary sacrifice schemes are widely used by companies as perks to attract candidates and treat their workforce.

Employees give up a portion of their wage in exchange for goods or services, and because their salary is effectively lower, they pay less in income tax and national insurance.

However, some schemes like computers, gym membership and health screening will be subject to tax from April 2017.

The move will not affect pensions, childcare vouchers, bicycles or ultra-low emission vehicles – some of the most popular schemes.

Tax relief for online carbooters

Small scale eBay merchants will be able to receive up to £1,000 a year tax-free from April 2017.

Similarly, people letting a room via a website will gain similar relief for the first £1,000 of property income.

By Amy White