What the Autumn Statement means for your savings

This week, Jeremy Hunt revealed his much anticipated Autumn Statement and some key developments for your money - including savings.

The statement focused on the same priorities which were set out at the beginning of the year by Rishi Sunak, from halving inflation to growing the economy and reducing debt. 

Hunt emphasised that cutting tax and rewarding hard work would be on the agenda, with plans to cut tax for over 29 million people, by reducing National Insurance contributions for Class 1 employees from 12% to 10% from January 6. 

The self-employed would also benefit from tax cuts and it could result in saving around £340 in 2024-25. 

However, this attention-grabbing news feels like an anticlimax, as the Office for Budget Responsibility announced the amount of tax we are paying is set to rise to its highest level in 80 years. 

Tax aside, the Autumn Statement then delved into savings accounts. 

All change for ISAs

The big news from the government was its plans to shake-up ISAs; giving them more flexibility and choice.

Currently, you can only take one of each type of ISA each year, but in April 2024 the government plans to scrap this rule and allow people to have multiple subscriptions to the same type of ISA. 

Plus, the government will allow partial transfers of ISA funds between providers during the year. 

This means you can have five cash ISAs if you wish, and it gives you the power to chase the best rates and move money with ease. 

The government has also removed the requirements to reapply for an existing ISA, so your ISA will now always remain open and you can use it whenever you need it. Innovative ISAs will also be developed further to include a wider range of investments. 

The age limit for ISAs will then become generalised, as currently children aged 16 and 17 can open a junior or cash ISA. The new rule will mean that the minimum age for opening an ISA will be 18 years old.

These developments were the biggest we’ve seen in years, although many were hoping that there would be changes to the ISA allowance, which currently stands at £20,000 for ISAs and £9,000 for junior ISAs. 

This has been frozen since 2017/18 and with the UK’s economic situation changing drastically in the past six years, it felt like the right time for a rethink. 

However, this didn’t happen and the allowance continues its freeze at £20,000 and £9,000 respectively. Lifetime ISAs also remain capped at £4,000 and Child Trust Fund remains at £9,000. 

Help to Save and pension reform 

Alongside these ISA changes, Hunt also said the government is reforming the Help to Save scheme. 

This scheme helps low-income workers to save for short and long-term goals, and the new design plans to encourage more savers to sign up and provide the best value for taxpayers. 

The government then plans to reform pensions as it hopes to provide a better outcome for savers and their pension arrangements. 

It plans to do this through more transparency with pension provision, investments and options for retirement, whilst emphasising the importance of investments for long-term returns. 

The Autumn Statement was the first step of this reform, and it is very much a long-term agenda, so we should expect to hear more from the government as this develops. 

What it means for your savings

Overall, the Autumn Statement will impact the way you save due to the ISA changes next year. Therefore, it’s a good idea to keep an eye on ISA interest rates so you are prepared to take advantage of the best rates in the new tax year. 

Currently, the best instant access cash ISA rate is 5.11% from Metrobank and this provider also has the top fixed-rate cash ISA rate at 5.71%. These rates are better than inflation, so it’s always worth comparing savings accounts to find the best deal. 

Plus, if the tax cuts mean you’ll make a saving next year, then you can plan to put this money into a savings account as an emergency fund. You’ll then have the bonus of earning some extra interest on the money.