Today's Autumn Statement saw Chancellor George Osborne announce a raft of cuts and giveaways to balance the Government's books. However, as a MoneySaving website and consumer champion, we've focused on the key changes that will affect you.
These include a hidden retrospective hike in student loans repayments, a U-turn on cutting tax credits and a stamp duty hike for those buying an additional home. Here's what you need to know:
Retrospective hike to student loans repayments
Currently, students in England who started university from 2012 pay 9% of everything earned above £21,000 a year (or £1,750/month pre-tax salary) once they graduate.
In 2010, the Government promised that from April 2017 this repayment threshold would be upped each year in line with average earnings. This meant graduates would have been spared having to repay more of their income towards their student loans, and fewer would have had to start repaying them in the first place.
It has now disgracefully backtracked on the promise, effectively hiking costs retrospectively. The Government admits the move will mean more than two million graduates will pay £306 more each year by 2020-21 if they earn over £21,000.
Planned tax credit cuts cancelled
Osborne has limited the hit those receiving tax credits could have felt. He reversed earlier plans to reduce the annual income threshold to receive tax credits from £6,420 to £3,850 from April 2016. It'll now stay at the higher amount, so more people qualify.
Additionally, the 'tapering' applied to the tax credits income threshold will remain at the same level. Currently, for every £1 you earn above £6,420, you lose 41p of benefit.
This loss, known as 'tapering', had been set to increase to a loss of 48p of benefit for every £1 earned above the threshold. But it will remain at this level from April 2016.
However, all other changes to tax credits and welfare announced in the Summer Budget will go ahead as planned. For more on this, see our Tax credits U-turn MSE News story.
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Compensation for 15-minute train delays planned
Commuters will be able to claim compensation for train delays of just 15 minutes under plans announced in today's Autumn Statement. However, currently there's limited detail on how compensation will be offered.
The new compensation plan came alongside promises of 'flexible season tickets' for rail passengers and improved wi-fi on some routes. See our Compensation for 15-min train delays MSE News story for more.
ISA limits frozen
These will remain unchanged from next April at £15,240 for adult ISAs, while the Junior ISA and Child Trust Fund limits will be kept at £4,080 in the 2016/17 tax year too.
See the ISA limits frozen MSE News story for more on this.
Stamp duty hike on buy-to-let and second homes
From April 2016, people buying additional property, including buy-to-let or second homes, will face a 3 percentage point surcharge on stamp duty rates.
This will apply to any additional residential property costing more than £40,000, meaning someone purchasing a £275,000 buy-to-let could see their stamp duty bill more than treble. See the Stamp duty hike MSE News story for more on this.
'Homes to save £30 on energy bills'
The current Energy Company Obligation (ECO) scheme, which helps pay for households to make energy efficiency improvements and runs until March 2017, will be replaced with a new, cheaper household energy efficiency scheme from April 2017.
The Government estimates replacing the ECO scheme will save the average household around £30 a year on energy bills from 2017 as it will cost suppliers less, and it expects those savings to be passed on, though whether they will be remains to be seen.
See the 'Homes to save £30 on energy bills' MSE News story for more.
State pension rates confirmed
Osborne announced the new state pension rates from April 2016, which are as follows:
- Basic state pension: This will rise to a maximum of £119.30/week, up from £115.95/week. This is in line with the Government's 'triple lock' guarantee, which states the basic state pension will rise by either of these three options – 2.5%, September's Consumer Prices Index figure or by average earnings – whichever figure is higher. This time it rose by average earnings. Those who reach state pension age before 6 April next year get this.
- New 'single tier' state pension: Those who reach state pension age on or after 6 April 2016 will get £155.65/week if they have the full 35 years of National Insurance contributions. This rate is higher than the current basic state pension (although some will get the additional state pension at present too). Full info on the different types in our State Pensions guide.
The Chancellor also revealed that those who leave the UK for more than four consecutive weeks will no longer receive pension credit or housing benefit. See the State pension rates confirmed MSE News story for more on this.
Free childcare to be limited
On childcare the Government announced the following:
- Tax-free childcare. The Government has limited who can get contributions towards childcare costs from 2017 to those earning a maximum £100,000 per year (per person, so if one parent goes over, a couple can't access it). The original plans stated the maximum income was £150,000 per person, per year. The Government will contribute up to £2,000 per child, per year for those eligible. It'll work as if you're paying for it from pre-tax salary so you'll still need to pay the majority but will get help. You'll have to work at least 16 hours a week to qualify (if a couple, both must do so).
- Free nursery hours. The Government had already announced plans to double free nursery places in England for three and four-year-olds from September 2017 from 15 to 30 free hours a week. However, only those who earn up to a maximum of £100,000 a year and who work at least 16 hours a week will qualify (if a couple, both must do so). If you don't qualify for the extension, you'll continue to get the existing 15 hours of free nursery per week, which everyone is entitled to regardless of what they earn or the number of hours they work.
Housing schemes announced
The Chancellor today announced two new schemes to help finance the cost of new homes – Help to Buy Shared Ownership and London Help to Buy.
Both schemes are available to first-time buyers and anyone moving home. Here's what we know so far about them...
Help to Buy Shared Ownership
Shared ownership already exists (see our Shared ownership explanation), but the scheme will be revamped in April 2016 to remove many of the current restrictions such as who can buy, who can build the properties and who a shared ownership owner can sell their property to.
Under shared ownership, people can buy a 25% to 75% share of a home and pay rent to a housing association on the remainder.
Changes already confirmed include:
- Where potential buyers work. Currently some restrictions state buyers must work in the local area. These will be lifted.
- Where potential buyers live. Currently some restrictions state you have to already live in council housing. These will be lifted.
- The limit on how much household income people have. Currently you can apply for shared ownership if your household income is £60,000 a year or less outside London, £85,000 or less in London. This will rise to £80,000 or less outside London, £90,000 or less inside London.
- We are still awaiting final details on what other restrictions will be lifted before April.
London Help to Buy
In a bid to address what the Chancellor described as the "housing crisis" in the capital, he has announced a new scheme – London Help to Buy.
Starting in early 2016 until 2021, it will allow Londoners with a 5% deposit to get an interest-free loan for five years worth up to 40% of the value of a newly-built home.
Help to Buy Equity Loans already exist for first-time buyers and home movers on new-build homes in England that cost up to £600,000. However, the maximum loan is 20% of the property price.
We will update our Help to Buy and Other Mortgage Schemes guide when more detailed information on these new plans, including how to apply, becomes available.
Maintenance loans for part-time students introduced
Since 2012, part-time students studying at least 25% of a full-time course have been eligible for tuition fee loans from the Student Loan Company on exactly the same basis as full-time students, but not for maintenance loans to cover the costs of living. See our Student Loans Mythbusting guide for more on how the system works and what you're entitled to.
However, the Government has announced that by April 2018, it will introduce maintenance loans and support for higher education students wishing to study part time.
It also plans to introduce maintenance loans for people who attend specialist, higher-level providers, including the four national colleges for advanced manufacturing, digital skills, wind energy, and creative and cultural industries, which were partly funded by businesses and launched in 2014.
The Government is to consult on the exact details of how both schemes will work.
Car insurance premiums 'to fall'
The Government is to introduce new reforms to tackle fraud in the car insurance industry, including removing the right to cash as compensation for whiplash with insurers instead paying for medical care, and removing legal costs by transferring personal injury claims of up to £5,000 to the small claims court.
It's believed this will reduce the number of fraudulent whiplash (and other) car insurance claims insurers have to pay out for, which will save them £1bn per year. The Government then expects these savings to be passed onto consumers, which it says will see motorists save an average of £40-£50 per year.
The Government will consult on the details of this in the new year. See our Car Insurance guide to cut costs now.
Additional reporting by Amy Roberts, Helen Saxon, Sam McFaul and Rebecca Rutt.