Autumn Statement 2012: Winners & Losers


Autumn Statement 2012: Winners and LosersToday’s Autumn Statement included a wide range of measures which will affect us all.

Were you a winner or a loser?

With so many announcements and changes it might be a case of ‘swings and roundabouts’.

Read on though to find out if you have gained more than you have lost.


Low paid workers

Low paid workers will particularly benefit from the increase to the Personal Allowance, which means that from April 2013 people will be able to earn £9,440 before they start to pay Income Tax.

Of course lower earners are likely to be hit by other measures in the Autumn Statement, particularly the below inflation rise in many State Benefits.

The higher Personal Allowance will also benefit higher paid people, increasing the amount they can earn before they start to pay tax.


Drivers, including individuals and businesses, will be pleased by the announcement that the proposed 3p rise in fuel duty, due to come into force in January, has been cancelled.

Owners of large homes

As expected George Osborne announced that there would be no ‘mansion tax’ or changes to council tax.

Income Drawdown investors

Retirees who have used Income Drawdown to turn their pension into an income, rather than using an Annuity, have seen the maximum level of income they can take fall by as much as 40% over the past couple of years, on the back of falling gilt yields and a change previously introduced by the coalition government.

In his first budget George Osborne reduced the maximum income allowable from 120% of the GAD (Government Actuary’s Department) rate to 100%, nervous that retirees would deplete their pension funds.

However, gilt yields then fell significantly resulting in a double whammy for Income Drawdown investors.

Responding to calls from Income Drawdown investors and pensioners groups, Mr Osborne has now reversed the previous decision and will now allow Income Drawdown investors to take 120% of the GAD figure, significantly increasing the income available from an Income Drawdown plan.

Although on the face of it good news, no date has been set for this change. It is believed that it will require new legislation, which could take a considerable amount of time to implement.

Small business owners

Owners of small businesses, who tend to occupy smaller premises, will benefit from the extension announced today of small business rate relief.


Pension savers

It was widely expected that pension savers would be hit and this prediction certainly came true.

The Annual Allowance will be reduced by £10,000 to £40,000 from the 2014/15 tax year, meaning that less money can be paid into pensions and qualify for tax relief.

It was also announced that the maximum amount which can be held in a pension, without tax being paid, will also be reduced from £1.5 million to £1.25 million.

The Chancellor said that only very small numbers of people would be affected, with 99% of people paying less than £40,000 per year into their pension. Those people who are affected can take some comfort from the fact that the new rules will not be implemented until the 2014/15 tax year, giving time to plan for the change

However, pension experts have warned that people with fluctuating earnings, including entrepreneurs may be adversely effected. Pension experts are also concerned about the impact of the lower Annual Allowance on members of Final Salary or Defined Benefit pensions. It is feared that long serving members of such schemes could inadvertently be hit with a tax charge if they receive a significant pay rise, which consequently increases their pension contributions.

400,000 ‘middle earners’

An estimated 400,000 ‘middle earners’ will be pulled into higher rate tax. The Autumn Statement included an announcement that the starting point for paying higher rate tax will increase by just 1%, rather than in line with inflation, from April 2014 onwards. This measure, known as ‘fiscal drag’ will raise an estimated £1 billion.

First time buyers

No new measures to help first time buyers, for example a return of the Stamp Duty holiday, were announced. First time buyers are a particularly beleaguered group, who are finding it hard to get onto the housing ladder, despite the introduction of the Funding for Lending Scheme.


Savers have had a particularly hard time of late with interest rates falling, as a result of the Funding for Lending Scheme, and inflation starting to rise, eroding the value of capital held in savings accounts.

No new measures, other than a small increase in the maximum which can be paid into an ISA (Individual Savings Account), were announced. Whilst it was possibly a long shot, many savers had hoped that changes would be made allowing them to hold the full ISA allowance in a Cash ISA.

People claiming State Benefits

George Osborne announced that many State Benefits, including Jobseekers Allowance, Income Support, Child Tax Credit and Working Tax Credit will only increase by 1% from April 2013, meaning a real terms cut with inflation running significantly higher.

Child Benefit will remain frozen until April 2014, after which it will rise by 1%.

Were you a winner or a loser?

We’d love to hear what you think about the Autumn Statement, were you a winner or a loser?

Why not leave us a comment below?

If you want to discuss how you are affected by the Autumn Statement our team of Independent Financial Advisers in Nottingham are here to help.

Feel free to call one of our IFAs today on 0115 933 8433, alternatively enquire online or email