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How does the 2024 Spring Budget affect older people?

How much income do you need in retirement

Written by Retirement Line Updated: 27th March 2024

Chancellor Jeremy Hunt delivered his Spring Budget on Wednesday 6 March. If you’re in or nearing retirement, here are some of the main changes coming into effect from April that could impact your money.

National Insurance cuts

We’ll begin with some good news for people still in work as they approach State Pension age. A key announcement in the chancellor's Spring Budget was a cut in the rate of National Insurance (NI). 

For those employed and paid between £12,571 and £50,270 a year, the current NI rate is 10% on earnings (it’s 2% on any earnings above that threshold). The 10% rate will fall to 8% in April. 

If you are self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 will go down to 6% from April.

However, the cuts won’t be of any help to people over State Pension age, since that’s when you stop paying NI. Also, thanks to the previously announced freeze on the income tax threshold until at least 2028, it is estimated that eight million taxpaying pensioners will see their taxes rise. 

Support during the current cost of living crisis 

It was noticeable that no plans for any further cost-of-living payments were announced in the Spring Budget. However, it was announced that the Household Support Fund will be extended for another six months. This allows councils to help pensioners and other people in need by funding essential services such as food banks, food vouchers and warm spaces.

Also, there was good news for motorists as the chancellor announced that the 5p cut in fuel duty on petrol and diesel has been kept for another year. This is seen as a reflection of increased pressure on household finances in recent years.

New ‘UK ISA’ for savers

There’s some positive news for those of us with savings put away for our retirement. A new tax-free ‘UK ISA’ is going to be available. The start date and interest rate will be agreed following consultation.

You’ll be allowed to save £5,000 a year into the British Isa, on top of the existing Isa allowance of £20,000. The money invested will be put into UK investments.

Changes to property taxes

There was also some good news for later life homeowners fortunate enough to own a second home or buy-to-let property. 

The higher rate of property capital gains tax (the tax you pay on any profit you make from the sale) will fall from 28% to 24% in April. This will mean that some older homeowners disposing of properties in their portfolio will be able to keep more of their profits to boost their retirement income if they wish.

Benefits, pensions and wages

We should also remember that two important announcements were made in the Autumn Statement in November which come into play this April.

  • A range of State Benefits will rise by 6.7%. These include Universal Credit, Attendance Allowance, Carers Allowance and Disability Allowance.

  • The State Pension will go up by 8.5%. This means it will be worth up to £221.20 a week for the new State Pension and up to £169.50 a week for the basic State Pension.

Further information

We hope that this has been a useful summary of some of the main changes to personal finances due to take effect from this April. If you need help to manage your money in retirement, help is available from a number of sources including:

Age UK - help with benefits and other matters.

Citizens Advice - information on benefits, debt and money and housing.

Turn2us - information on benefits, State Pension and more.

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