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Faye Church, Senior Financial Planning Director, Investec Wealth & Investment (UK):

Over the last few months, there has been significant pressure on the Chancellor to deliver tax cuts and boost growth within this year’s Autumn Statement. Yet with interest rates still high, the eye watering increase in interest payments on the £2 trillion of national debt from £20bn to £30bn this year could have made any significant tax cuts “virtually impossible”.

However, borrowing over the current financial year has been lower (£11.4 billion less than predicted), falling inflation was reported at 4.6% in October, 10-year gilt yields have dropped to 4.14%, and the likelihood of interest rate falls next year have all suggested there could be scope for some meaningful changes.

Now the government has £19.6 billion of fiscal headroom to play with, almost double the figure they had going into the Spring Budget, we find ourselves with an Autumn Statement more focused towards businesses, hopefully whilst avoiding adding fuel to the inflation furnace, which would have the opposite effect and continue to hinder sustainable growth and public finances.


Gone are the days where we have a job for life and retirement meant a gold watch and gold-plated pension. However, a “pension pot for life” goes someway to allowing us to accumulate pension benefits in one place, rather than having a collection of small, bitty pensions that can get lost or forgotten. A headache for payroll, but a flexible win for the employee.

It is important to make sure that you choose the correct pension though, as not all pensions are the same in terms of charges, investment choice and flexibility. We would recommend you seek advice to ensure the most suitable pension provides your hard earned pension contributions the best opportunity to grow.

Given the complex nature of pension rules, the delay of the removal of the Lifetime Allowance and beneficiary’s drawdown is not surprising. These rules are tricky to navigate at the best of times without looking at how this would work in practice and any decisions will continue to be delayed until April 2024.

Care must be taken when making decisions that may affect anyone’s position in relation to the Lifetime Allowance and we would urge you to seek advice from your financial planner.

We hope that April 2024 will bring some clarity to the rules, especially for those that can’t delay making decisions on taking benefits.

State pension

There have always been questions around the sustainability of the infamous triple lock; something that when asked, many people couldn’t accurately describe. Basic state pension increased by 10.1% in April this year, the highest ever state pension increase, and remains set to increase by 8.5% in April 2024; both increases due to high CPI figures.

These high increases are steadily pushing the basic state pension towards the personal allowance of £12,570, which remains frozen until April 2028. Last year, we saw around two million non-tax payers pushed into the basic rate tax bracket, and this will continue as state pension increases against a backdrop of frozen tax thresholds.

National Insurance

A cut in National Insurance from 12% to 10% will benefit lower and middle earners giving a much needed boost to take home pay. The current system takes 12% of annual earnings between £12,570 and £50,270, so someone earning an average salary of £35,000 would save £350 a year. For someone earning £80,000 a year, they stand to save £754 a year.

Help for the self-employed by abolishing Class 2 National Insurance Contributions will save £192 per year, and a reduction in Class 4 National Insurance Contributions from 9% to 8% will save around two million self-employed £350 per year from 6 January 2024.

Faye Church
Faye Church, Senior Financial Planning Director, Investec Wealth & Investment (UK)

A pension pot for life goes someway to allowing us to accumulate pension benefits in one place, rather than having a collection of small, bitty pensions that can get lost or forgotten. A headache for payroll, but a flexible win for the employee.

Personal Taxation

Taxes, as a share of national income are on track to be at their highest since the Second World War and many are feeling the pinch from frozen tax thresholds, increased mortgage rates and cost of living increases. As expected, the Chancellor cannot afford to make any significant changes that may continue to fuel inflation, so thresholds and allowances remain firm.

If you still sit firmly within the higher rate tax bracket, there is the option of redistributing income-producing assets between spouses. Also, making pension contributions and investments into Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) can enable you to claim back some of the income tax paid. Not forgetting the increased risk associated with this type of investment and the qualifying criteria that applies. It’s important to seek expert financial advice where required.

Inheritance Tax (IHT)

It was anticipated that there could have been changes to allowances, and even the headline inheritance tax rate, ahead of the announcement. However, there was not one mention of IHT by the Chancellor in this statement. The larger plan to abolish IHT has been rumoured to be a pre-election promise by the Conservatives, a system that is in need of modernisation, although to remove IHT completely would cost an estimated £7 billion to the government's tax take.

Most people who find themselves with an IHT liability take steps to reduce it, yet most never escape from it completely. Any measures in the future would be welcome news to those that have a liability. In the meantime, it still remains important to take advice in a complex area of financial planning.

Capital Gains Tax (CGT)

As per the Spring Budget earlier in the year, the CGT allowance is still due to reduce from £6,000 to £3,000 in April 2024. However, CGT rates are low in comparison to other rates of tax.

We would recommend you continue to review your investments regularly where we can advise on a revised strategy, if appropriate.

Dividend Tax

Again, as announced in the Spring Budget, the dividend allowance will reduce again from £1,000 to £500 in April 2024, an allowance almost not worth having. An investment of £15,000 in the FTSE 100, yielding on average 3.5%, would breach this threshold.

It may be worth continuing to reassess whether dividends are the most effective way of receiving income, especially if you own your own business or have the flexibility to generate an income in other ways. Fixed income investments such as corporate bonds and gilts have been a very attractive alternative whilst interest rates have been so high, although not forgetting to assess the suitability of any investment; this is certainly an area that should stimulate discussion.

Personal Savings Allowance

There has been no change in the Personal Savings Allowance. Currently, those with savings of over £20,000 that sit outside of an ISA could be breaching this allowance by just shopping around for the best interest rates on their rainy day fund. By comparison, in 2021, interest accrued on £275,000 of cash held on deposit would have exceeded the £1,000 savings allowance. But, even though we are earning more on cash savings, the effect of fiscal drag rears its ugly head; inflation erodes the real value of cash and then any excess above £1,000 could be taxed.

Any good financial plan allows for a rainy day fund, or a buffer for those unexpected one-off costs and using ISA allowances for these funds can limit the tax payable on high rates of return. Where ISA allowances are already being used, it is always worth having a discussion around whether other alternatives may be appropriate.


There was wide speculation around changes to ISAs. We were all hoping for some increased flexibility, which could have broken down some of the barriers to investment and made it easier for more people to save.

There has also been pressure to revisit the Lifetime ISA rules, which were also not mentioned today, again, maybe something for the pre-election campaign.

Cash ISAs have come back in popularity recently due to the rise in interest rates, with the ability to hold cash attracting decent rates of tax-free interest. Where you can diversify your holdings each tax year there has never been a mechanism to diversify in the current tax year.

The “mix and match” ISA solution will allow anyone to open as many ISAs as they want, with a £20,000 maximum, without being restricted to opening just one Cash ISA or one Stocks & Shares ISA in the current tax year.

How have investment markets reacted?

John Wyn-Evans, Head of Investment Strategy, Investec Wealth & Investment (UK): 

A year ago, Chancellor Jeremy Hunt presented his first Autumn Statement in the aftermath of the disastrous “mini” Budget delivered by his immediate predecessor Kwasi Kwarteng. It was time for a “safe pair of hands” to reinstate confidence in the government, of which Prime Minister Rishi Sunak had just taken the reins following the departure of Liz Truss. Hunt duly unveiled nothing that would upset financial markets. Indeed, he introduced a well-received programme of fiscal tightening, although much of it was carefully timed not to take effect until after the next election, which must take place by January 2025 at the latest.

The prelude to the current statement was much less fraught. Even so, a moribund economy against a background of higher interest rates offered the Chancellor limited room for manoeuvre. October’s fiscal deficit came in a little higher than expected owing to the increasing cost of servicing the country’s debts, but that damage was limited by higher-than-forecast tax revenues. One positive fiscal side-effect of higher inflation is that nominal profits and wages tend to rise too, leading to higher nominal tax payments. The benefit to the government has been amplified by last year’s decision to freeze income tax bands, meaning that more people have been dragged into a higher tax bracket, so called “fiscal drag”. It’s a neat trick politically, because many people will not be aware of the imposition, tending to focus more on headline income tax rates.

And, naturally, it is the headlines that start to matter more as we approach general elections. Today’s Autumn Statement could be seen as firing the starting gun for the next race towards 10 Downing Street, although opinion polls would suggest that Labour leader Sir Keir Starmer left the starting gate a long time ago.

The lead up to the statement, in what seems now to be the accepted modus operandi ahead of such events, featured a trail of hints and leaks as to what might be announced, all designed to test expert reaction and voter preferences. We would observe that the key initiatives delivered fall into two categories: what’s good for the long-term health of the economy; and what grabs votes.


John Wyn-Evans
John Wyn-Evans, Head of Investment Strategy at Investec Wealth & Investment (UK)

Market reaction has been limited. This is probably a good thing, as markets have tended to react negatively in recent times to fiscal developments.

In the first bucket came a commitment to extend and make permanent the £9bn-a-year tax break for business, a policy that was splashed across the morning’s business pages. It is directed at spending on IT equipment, plant and machinery and allows for full deductibility against taxable profits. We applaud such a pledge. One of the greatest weaknesses of the UK economy in recent years has been the lack of productivity growth. That has been blamed variously on the extended fallout from the financial crisis to the effects of Brexit and the chaos within government, all of which, no doubt, have contributed. Today’s announcement - although on a much smaller scale than adopted by the Biden administration in the US with its multi-hundred-billion-dollar CHIPS Act - is intended to kick start much-needed investment in the country’s technology capital stock. Crucially, if it is, as currently intended, a permanent feature of the fiscal landscape, it will encourage companies to take a longer-term view of their investments in this key sector.

On the personal taxation front, the last few weeks have seen ideas floated for an abolition of Inheritance Tax or a one penny reduction in the Basic Rate of income tax from 20p to 19p. One of Prime Minister Sunak’s ambitions is to get this rate down to 16p, should he survive to see it through. In the end, though, the Chancellor opted for a reduction of 2% in the rate of National Insurance paid by employees. This will kick in on 6 January 2024 and it uses pretty much all of his existing fiscal headroom.

There is plenty of water left to flow under Westminster Bridge before the election, and it is already being suggested that the income tax reduction will be announced during the March Budget. It is not beyond the bounds of possibility, although unlikely, that there will be one more Autumn Statement ahead of the polls, and so there is an element of wanting to keep some dry powder for the campaign.

Market reaction has been limited. This is probably a good thing, as markets have tended to react negatively in recent times to fiscal developments. We usually look at market reaction to these statements through the lenses of currency and bond markets, which tend to be where investors’ response is best reflected. The pound did fall by around a cent against the US dollar during Mr Hunt’s speech, but this seems to have been on account of a better-than-expected employment data release in the United States resulting in a stronger dollar.

Gilts had been rallying into the speech and then gave back their gains but showed no great divergence against other major developed bond markets. It seems as though the OBR’s new economic projections contained few surprises. It concluded that the UK will not fall into recession in 2023 but downgraded its longer-term sustainable growth forecasts while tweaking its inflation expectations higher.

The UK stock market is much less directly affected by domestic policy than in the past, especially within the realm of the large capitalisation FTSE 100 Index. The main reason for the index lagging other markets today appears to be a near-5% fall in the oil price, which is dragging down the share prices of oil majors Shell and BP. That is not related to the statement.

Investors can now return to their task of evaluating the current inflation, interest rate and economic cycles, both here in the UK, and, probably more importantly, in the United States and China, which remain the dominant forces in terms of their impact on global growth.

We continue to believe that there is some light visible at the end of a long tunnel which has seen both bond and equity markets struggle for the last two years, meaning that balanced portfolio returns have been disappointing. Inflation does appear to have peaked, and there will soon be scope for central banks to reduce interest rates, laying the groundwork for a new economic growth cycle.

Important information

Opinions, interpretations and conclusions represent our judgement as of this date and are subject to change. Tax treatment depends on the individual circumstances of each client and may be subject to change in future. All statements concerning tax treatment are based upon our understanding of current tax law and HMRC practise and can be subject to change.

Important information

The information in this document is believed to be correct but cannot be guaranteed. Opinions, interpretations and conclusions represent our judgment as of this date and are subject to change. Past performance is not necessarily a guide to future performance. The value of assets such as property and shares, and the income derived from them, may fall as well as rise. When investing your capital is at risk. Copyright Investec Wealth & Investment Limited. Reproduction is prohibited without permission.

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