There were few surprises in Philip Hammond’s first Autumn Statement, but the new Chancellor of the Exchequer did announce a number of policies which will affect older workers.
The 2016 Autumn Statement examined
Further increases in the personal allowance
Hammond continued his predecessor George Osborne’s approach to the tax-free personal allowance, revealing that the amount people can earn before income tax is due to rise further over the course of the current parliament.
The allowance is scheduled to increase from the current £11,000 to £11,500 next April, but it will be lifted to £12,500 by 2020.
At the same time, the amount of money that can be earned before higher-rate tax at 40% kicks in will go up to £50,000 from 2020 – this threshold currently stands at £43,000.
National living wage also to rise
The recently introduced national living wage (NLW), currently paid at £7.20 an hour, will increase to £7.50 from April 2017. The government has a target of £9 an hour for the NLW by the end of the present parliament in 2020.
Hammond also said he would increase the amount of money spent on ensuring that businesses did actually pay their employees the NLW. This follows recent media reports of companies such as delivery firms and restaurants effectively paying staff less than the statutory minimum due to long working hours.
Salary sacrifice changes
The policy of giving employees certain benefits and reducing their take-home pay accordingly has come under scrutiny from the new Chancellor: employers which provide the likes of company cars or computer equipment under salary-sacrifice arrangements can cut their own and their employees’ tax bills. As a result, many forms of this scheme will be phased out from next April.
This does not apply at present to salary sacrifice for pension contributions or childcare, although some analysts believe the Treasury may be planning further crackdowns in years to come.
Tougher measures on pension scams
Hammond also announced plans to tackle the growing menace of investment scams, the majority of which are aimed at people who are saving into a pension. The government is to launch a consultation to work out how it should deal with companies who contact investors out of the blue and promise exciting, high-growth investment opportunities.
Many of these firms are exploiting the introduction last year of a more flexible pension regime, which means savers have much greater choice over how to use their funds.
People who are over the age of 55 – the point at which pension cash can be accessed – or who are approaching retirement are thought to be high on the list of fraudsters’ potential victims.
Could a ban on cold calling protect savers?
Subscribe to Saga's FREE weekly email newsletters for more of the articles you love, delivered straight to your email inbox.
Enjoyed this article?
You can find more of the same in our Money hub, offering advice, tips and news on all things financial, or you could sign up for our Money newsletter to enjoy more articles like this delivered to your email inbox each week!