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Workers pay the price for pension and benefit rises

In the wake of Chancellor Jeremy Hunt's Autumn Statement, financial experts at money.co.uk have asked whether it's fair for workers to be paying more while pensioners and other benefit claimants get cost-of-living rises.

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The Chancellor announced the state pension and other benefits would rise in line with September's inflation figure of 10.1%, but while he gave with one hand, he took with another.

The National Living Wage is only set to rise 9.7%, less than inflation, while tax thresholds would not rise at all.

Static tax thresholds mean that someone working a 35-hour week on National Living wage will pay £334.88 more in income tax next year - even though their wages have risen less than inflation.

Frozen tax thresholds will also mean that more and more people will pay the price of any pay rises they get by moving into higher income tax bands.

James Andrews, senior personal finance editor at money.co.uk, said: "Support for the most vulnerable is welcome, but it seems odd that those on minimum wage are not at least getting inflation-linked rises.

"Worse, they're losing more of their wages to tax, as frozen thresholds mean income tax takes a bigger bite out of their pay packets.

"And it's not just the lowest-paid that will lose more of their pay packets. Freezing tax thresholds until 2028 could see millions of workers pushed into higher tax brackets than they are currently in.

"At a time when the country is battling a cost of living crisis and entering what could be a protracted recession, taking more money from workers wages seems an odd decision."

You can see a full round up of the major personal tax and benefit changes here: https://www.money.co.uk/cost-of-living/autumn-statement-2022


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