Chancellor's Autumn Statement 2022: Martin Lewis's instant reaction to tax changes, state pension rises and further cost of living help

Watch Martin Lewis's instant Autumn Statement summary and analysis

A round-up of today's announcements

Key announcements made today include the following – the links will take you to more info:

• Benefits will rise by 10.1% from April 2023 for 10 million households. 

• State pension to rise by 10.1% as the 'triple lock' is guaranteed from April 2023. 

• The minimum wage will rise to £10.42 an hour from April. 

• Major changes to the Government's energy support package have been announced.

• More one-off cost-of-living payments, worth up to £1,350, to come next year. This includes an extra £900 for those on means-tested benefits, an extra £300 for pensioners, and an extra £150 for those on disability benefits. 

• Mortgage support has been expanded to help those struggling with payments. 

• Council tax in England is likely to rise by a higher amount next year. 

• More homebuyers are to pay stamp duty from 2025 as threshold increases will be reversed.

• Income tax thresholds have been frozen until April 2028, meaning millions of workers will pay more.

• The top 45% tax threshold will be lowered, which means higher earners will pay more income tax.

• Investors are to pay more tax as the dividend and capital gains tax-free allowances will be cut. 

• Electric vehicle owners will pay road tax from April 2025.

If you're struggling with rising costs, see our Cost of living crisis help page for info including ways to save and how to heat the human, not the home.

10 million households will see benefits rise by 10.1% from April 2023

From April 2023, most benefits and tax credits will increase by 10.1%, in line with September's Consumer Prices Index measure of inflation. This means, for example:

• If you're a single person over 25 currently claiming universal credit, you'll get an extra £33.83 a month, as your allowance will rise from £334.91 a month to £368.74 a month. 

• If you're a couple or single parent currently claiming tax credits, you'll get an extra £214.65 a year, as your allowance will rise from £2,125 a year to £2,339.65 a year.

The overall benefits cap (the maximum amount you can get in benefits) will also rise with inflation from £384.62 a week to £423.45 a week if you're in a couple or a single parent, and from £257.69 a week to £283.72 if you're a single adult. 

MoneySavingExpert.com founder Martin Lewis explained: "I know some are worried about this and struggling with the sums of a 10.1% rise. You basically will get a tenth more than you get now. So, for every £100 you get now, a tenth is £10, so you will get £110 from April (actually £110.10 but let's keep it simple)."

See our Universal credit guide for more on how this benefit works. You can also do our 10-minute benefits check to find out if you're missing out on crucial support – even some families with an income of £50,000 or more can qualify for help.

State pension to rise by 10.1% as 'triple lock' guaranteed from April 2023 

Since 2010, increases to the state pension have been based on the so-called 'triple lock' commitment, which guarantees that payments rise in line with the largest of September's Consumer Prices Index (CPI) measure of inflation, average wage growth, or 2.5%.

This financial year, the triple lock was suspended due to a spike in average earnings growth caused by workers coming off furlough and pandemic-related restrictions easing, with the increase instead based on the higher of 2.5% or CPI inflation – known as the 'double lock'.

Today, the Government announced the return of the triple lock for the new and basic state pensions, which means they'll rise by 10.1%: 

• If you reached state pension age before 2016, how much you'll receive will rise by £14.33 a week from £141.85 a week to £156.18 a week.

• If you reached state pension age after 2016, how much you'll receive will rise by £18.70 a week from £185.15 a week to £203.85 a week. 

The triple lock is, however, only guaranteed for the 2023/24 financial year. See our State pension guide for more information on how the system currently works. 

Commenting on the announcement, Martin said:

The minimum wage will rise to £10.42 an hour from April

From 1 April 2023, the national minimum wage paid to:

• Workers aged 23 and over will rise from £9.50 an hour to £10.42 an hour – a £1,600-a-year rise for full-time workers.

• Workers aged 21 to 22 will rise from £9.18 an hour to £10.18 an hour.

• Workers aged 18 to 20 will rise from £6.83 an hour to £7.49 an hour.

• Workers aged 17 and under – and apprentices – will rise from £4.81 an hour to £5.28an hour.

The national minimum wage, called the 'living wage' by the Government, is different from the 'real living wage', which is an amount calculated by campaign group the Living Wage Foundation as the minimum pay workers and their families need to live. The 'real living wage' is currently £10.90 an hour across the UK, and £11.95 an hour in London, for anyone aged over 18.

More one-off cost-of-living payments, worth up to £1,350, to come next year

These are in addition to the existing cost of living payments made this year and will be UK-wide. Depending on your circumstances, you might get one or more of the payments – up to a total of £1,350. They will be tax-free, will not count towards the benefit cap and will not have any impact on existing benefit awards.

However, the exact details and timings of how the payments will be made are yet to be confirmed. Here's what we know so far:

An extra £900 for those on means-tested benefits

This includes more than eight million UK households getting any of the following:

• Child or working tax credits

• Income-based jobseeker's allowance

• Income-related employment and support allowance

• Income support

• Pension credit

• Universal credit

The £900 will be split into more than one instalment.

An extra £300 for pensioners

More than eight million pensioner households across the UK will get an additional £300 to help with bills in 2023/24, as they are this year.

An extra £150 for those on disability benefits

Over six million people across the UK on non-means-tested disability benefits will get a further £150 payment to help with the additional costs they face. This includes everyone eligible for:

• Armed forces independence payment

• Attendance allowance

• Constant attendance allowance

• Disability living allowance

• Personal independence payment

• Scottish disability benefits

• War pension mobility supplement

Council tax in England likely to rise by a higher amount next year

Currently, councils in England with social care responsibilities can only raise council tax by a maximum of 3% without a referendum – though overall bills can rise by more than this due to separate charges from other bodies, for example parish councils, fire and rescue authorities and police and crime commissioners.

However, from April 2023, councils will be able to raise council tax by up to 5% without a referendum – so many households in England are likely to pay more. Many are entitled to discounts that can help save £1,000s – see our Council tax discounts guide for full info. 

In Wales, the Welsh Parliament has the power to cap council tax rises selectively, while there's no capping power in Scotland. Northern Ireland doesn't have council tax. 

More homebuyers to pay stamp duty from 2025 

In September, the Government raised the threshold at which homebuyers start paying stamp duty from £125,000 to £250,000. In addition, it increased the threshold at which first-time buyers start paying stamp duty from £300,000 to £425,000.

But today, the Chancellor announced that both these changes would be reversed – though this won't take effect until 2025. It means that from 2025, homebuyers won't pay stamp duty on the first £125,000 of a main residential purchase, while first-time buyers won't pay stamp duty on the first £300,000 of a main residential purchase.

For a full rundown of how stamp duty works – and how to work out how much you'll pay – see our Stamp duty guide.

Millions of workers to pay more in income tax as thresholds frozen until April 2028

The Government's decision to freeze income tax thresholds means many who get a wage rise – even if it's below inflation – will end up paying more in income tax over time. Some may be drawn into a higher tax bracket (for example, some non-taxpayers may start paying 20% on a bit of income) – others may stay in the same tax bracket but will still find themselves paying a bigger proportion of their income as tax if their wages rise.

This process is known in Treasury jargon as 'fiscal drag'. To explain exactly what this means in practice, here's MSE founder Martin Lewis: "Imagine someone who currently earns £12,000 now. Because earnings do tend to increase each year, in a couple of years' time they'll earn £13,000. But because the thresholds are frozen, they will now start to pay 20% tax on some of their earnings.

"And in fact, what freezing the threshold does is that it means no matter what you earn, as your earnings increase, a bigger proportion of your earnings goes on tax. And that's how the Chancellor makes money from it."

Higher earners to pay more in income tax as top 45% tax threshold to be lowered

From April 2023, the 45% top rate of tax, which currently applies on earnings above £150,000 in England, Northern Ireland and Wales, will apply on earnings above £125,140 instead. Scotland sets its own tax bands – the Scottish Government is due to set out its tax and spending plans on Thursday 15 December.

The change means those earning £150,000 or more will pay just over £1,200 more a year, the Chancellor said.

It also means that many higher earners will lose their personal savings allowance of £500 – so will now have to pay tax on any savings interest they earn outside an ISA.

We're planning to update our Income Tax Calculator with this new information as soon as possible. In the meantime, see our Tax rates guide for this year's rates. 

Martin said: 

Investors to pay more tax as allowances are cut

The annual dividend allowance will fall from £2,000 to £1,000 from April 2023, and to £500 from April 2024. Dividends are payments made to shareholders by firms, usually out of their profits.

The annual capital gains tax allowance will be cut from its current level of £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. Capital gains tax is charged on any 'gain' or profit you make when you sell or dispose of assets, such as personal possessions, a second home or shares that aren't within an ISA.

Electric vehicle owners to pay road tax from April 2025

The Government says it'll start charging vehicle excise duty (commonly known as road tax or car tax) on fully electric cars, vans and motorcycles from April 2025. These vehicles are currently exempt from the tax.