The changes to benefits and savings that may affect you
OCTOBER saw the delivery of the 2018 Autumn Statement by Chancellor of the Exchequer Philip Hammond but the changes to wages, benefits, pensions and savings announced won’t take effect until April.
Here are the headline issues and what they might mean for you, courtesy of Age UK.
STATE PENSIONS
The basic state pension and new state pension increase by 2.6 per cent from April 6, a cash increase of £3.25 a week and £4.25 a week respectively.
It means the basic state pension (currently £125.95) will be at least £129.10 a week, an extra £164 a year while the new state pension (currently £164.35) will be at least £168.45 a week, an extra £213 a year. From 2019, the state pension age will gradually increase for both men and women to reach 66 by October 2020.
State pension age will be increasing from 66 to 67 between 2026 and 2028. There will also be reviews every five years after that to look at State Pension age.
PRIVATE PENSIONS
Lifetime allowance for pensions will increase in line with the Consumer Price Index (CPI), rising to £1,055,000 for 2019-20.
This is a limit on the value of payouts from your pension schemes that can be made without triggering an extra tax charge. These payouts could be lump sums or retirement income.
PENSION CONTRIBUTIONS
The minimum contributions for auto-enrolment pension schemes will increase for employers and employees from April 2019.
Existing rules mean employers must contribute a minimum of 2 per cent of a worker’s pre-tax salary, with the worker contributing 3 per cent. Under the new rules, employers and employees will now have to contribute a minimum of 3 and 5 per cent respectively.
TAX ALLOWANCES & THRESHOLDS
The amount of income you can earn before you pay tax – the personal allowance – increases from £11,850 to £12,500 on April 6, 2019. Basic rate tax will be still payable on taxable income up to £34,500 and the higher rate threshold will be increased from £46,350 to £50,000.
SAVINGS
The ISA annual subscription limit for 2019-20 will remain unchanged at £20,000.
WORKING-AGE BENEFITS
The majority of working-age benefits, such as jobseeker’s allowance, are unchanged. They are frozen at their 2016–17 levels for four years following the Welfare Reform and Work Act 2016.
UNIVERSAL CREDIT
Over £1billion has been set aside over five years to fund top-up payments from those who have been moved on to universal credit from other benefits.
MINIMUM AND LIVING WAGES
Both the National Living Wage (NLW) and National Minimum Wage (NMW) rates will increase in April.
For workers aged 25 and over the new NLW minimum rate will go up from £7.83 per hour to £8.21 per hour.
The new NMW rate for people aged 21-24 will rise from £7.38 to £7.70 an hour; for 18 to 20-yearolds from £5.90 an hour to £6.15 an hour, and for those of school age but under 18 from £4.20 an hour to £4.35. The minimum rate for apprentices will also increase from £3.70 to £3.90 an hour, as long as they are under 19, or 19 and over and in their first year of their current apprenticeship.