The average family is likely to be more than £800 a year worse off after Jeremy Hunt unleashed a wave of tax changes in his Autumn Statement today.

The income tax burden on millions of workers increased and Mr Hunt also set the stage for massive increases in council tax bills

At the same time he confirmed that help with soaring energy bills is due to be reigned in.

Liz Truss’s plan to underwrite all bills for two years will end after just six months and be replaced with targeted, cheaper, assistance aimed at those least able to pay. It means families will be paying £1,000 extra by next spring.

The state pension will rise by 10.1 per cent and pensions and benefit payments will also rise by the same amount.

This is how you will be affected: 

How much more tax will I have to pay? 

Millions of households now face higher tax bills.

Mr Hunt extended the freeze on income tax thresholds and allowances for two years. This means even middle earners now face paying the 40p rate of tax.

Currently, Britons pay 0% tax on earnings below £12,570, 20% on earnings up to £50,270, 40% on earnings up to £150,000 and 45% on earnings over £150,000.

Freezing the first three thresholds means that as your pay increases over the coming years, you will move into a higher tax band.

Economists calculate that if you receive a £60,000 salary, over the next five years you could lose £14,990 in extra tax.

The graph below shows how different earners are expected to be affected by 2028.

The Chancellor will also lower the threshold for paying the top 45p rate to £125,140 from £150,000.

This will bring 250,000 people into the highest rate, costing them £580 a year. Find out how much you could lose below. 

How will pensioners be affected?

From April pensions and benefits will rise in line with the September inflation figure of 10.1 per cent, which will see the new state pension rise by £18.70 to £203.85 a week.

The state pension will be £10,600 a year. 

What about energy bills?

The energy price guarantee will remain until 31 March 2024. 

But from April the cap will be increased by 20%, meaning the average bill will increase from £2,500 to £3,000.

Some poorer households will receive targeted payments to help with the cot of living crisis.

They are £900 for those on benefits, £300 for state pensioners, £150 disability payment. 

 The plan only caps the cost per unit that households pay, with actual bills still determined by how much is consumed.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: ‘The new energy support package will come as something of a relief for average earners, who were worried they might be left out in the cold.

‘The new package, from April, will keep bills at £3,000 for average users, protecting them from a rise to as much as £3,700.

‘This still leaves them with a horrible mountain to climb.

‘In March this year we were paying an average of £1,277 on our energy bills, so we’ll have to find almost two and a half times more cash to pay our bills within 13 months.’ 

Will I have to pay more council tax?

The decade-long cap on council tax increases is being lifted so town halls can impose 5 per cent without holding a referendum. 

At the moment, councils cannot make increases of more than 3 per cent, including a one per cent precept to pay for social care, without holding a local poll. 

The move could put £100 on an average Band D bill. 

What happens to the minimum wage?

There was a significant increase in the national living wage – from £9.50 an hour to £10.42 – meaning a pay rise of around £1,600 per person. 

Will people on benefits receive more?

Benefits payments are usually updated to account for inflation each April. Next year, this will equate to a 10.1% increase – or £500 extra for claimants, the chancellor said.

This will add an extra £600 to the average household on benefits. 

The benefit cap will also rise from £20,000 to £22,020 for families nationally and from £23,000 to £25,323 in London.  

Ministers will also introduce extra cost of living payments for the ‘most vulnerable’, with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.  

What if I drive an electric car? 

All Electric Vehicles will pay £165 a year in in road tax from 1 April 2025.

Electric cars registered after 1 April 2017 will retrospectively be charged this standard amount.   

New Electric Vehicles  from 1 April 2025 will pay the lowest ‘first year rate of VED’, which is currently just £10 for one year.

Then from year two will move to the £165-a-year standard rate.

Electric cars that cost over £40,000 will also pay the ‘Expensive Car Supplement’.

This is an extra £355 a year for five years on top of the standard rate of £165 – a total of £520 a year for five years.

What about stamp duty? 

The stamp duty cuts announced at the last mini budget will end in 2025.

They meant that no stamp duty is paid on the first £250,000 of any property purchase – double the previous threshold of £125,000.

For first-time buyers the duty threshold was increased from £300,000 to £425,000.

What’s happened with inheritance tax? 

Changes to inheritance tax (IHT) have been publicly mooted as a way for the Government to increase its tax receipts. HMRC took a record £6.1 billion from the tax in 2021/22, 14 per cent more than 2020/21.

The increase is in part down to the sharp rise in house prices meaning more estates now cross the threshold at which they pay the tax.

Currently, if the deceased’s estate, including assets such as money, property or shares, is less than £325,000 then no IHT is payable.

The threshold had been slated to increase in 2025-26, but after today’s Autumn Statement this will now be pushed back to 2027-2028.

The move will raise an additional billion to the Government’s pot, according to Quilter.

Furthermore, Quilter adds, as the amount you are allowed to gift has not increased with inflation the chance for people to reduce what their estate pays in inheritance tax has been reduced.

If the nil band tax rate for inheritance were to rise with inflation it would increase to £338,000 in 2026/27 and £351,520 in 2027/28.

Paul Barham, partner at accountancy firm Mazars commented: ‘The stealth raid on estates continues with the nil-rate band now frozen until to 2028. Disregarding the significant rises in house prices and other assets, the threshold will have been left on ice for nearly two decades.

‘It has, and will continue to hit, millions of unsuspecting families who never expected to face an IHT bill.’

Has anything changed for married couples? 

The married couple’s allowance will rise by 10.1% next year – leading to it being valued between £4,010 and £10,375. 

Who will be worst affected by the ‘perfect storm’ of tax rises and spending cuts?   

Middle income families with mortgages were hit by the forecast perfect storm of tax rises – personal and probably on their homes – alongside an energy bill increase and cuts to child benefits. 

The three main tax rates – 19p basic, 40p higher and 45p additional rate – will not change, as that would be politically dangerous.

But it is the thresholds at which rate kicks in that are expected to be where workers lose out – as many as three million of them.

Currently workers earning between £12,570 and £50,270 pay the basic rate of income tax. But wage inflation is currently running at 6 per cent.

This means that as wages rise to deal with increases in living costs (CPI inflation is currently at 10.1 per cent) more middle income workers will be dragged into the 40p rate bracket.

The tax thresholds were frozen until 2026, but Mr Hunt extend this until 2028. It is expected to cost someone on £50,000 an extra £1,893 a year by the time the freeze comes to an end.

Mr Hunt also took more proactive action to increase the tax bills of higher earners, to make the Statement seem fairer.

He abandoned plans to reinstate Labour’s 50p top tax rate – but will still hammer higher earners by reducing the income level at which the top 45p rate kicks in from £150,000 to £125,000, dragging more people into the tax bracket. 

Anthony Whatling, tax partner at wealth manager and professional services firm Evelyn Partners, said: ‘In 1990 only 1.7 million people paid 40 per cent tax, with the figure rising to 2.1 million when Tony Blair came into power in 1997.

‘HMRC estimated the number of people being drawn into the higher rate band to have surged by nearly 44 per cent since the 2019/20 tax year to 5.5 million this year.

‘At these rates of increase, and given that earnings are rising quite rapidly, it is probable that the number of people subject to 40 per cent income tax will exceed eight million under this prolonged freezing of allowances until 2028. That will be double the number of higher rate taxpayers when the initial freeze was announced by Sunak in 2021.’

 Middle-aged households – ranging from 40 to 64-year-olds – will also see the largest increases in their energy bills.

Typical charges will rise  by over £1,000 on pre-crisis levels, to between £2,200 and £2,400.

A Resolution Foundation report found that even with Government support, the typical household energy bill will be 83 per cent higher in 2022-23 compared to pre-crisis levels.

But those aged between 40 and 64 are set to benefit the most from cost-of-living support measures announced this year because cuts to national Insurance contributions do not benefit those over the state pension age.

Thresholds for National Insurance, inheritance tax and tax-free pension savings will also be frozen, while the threshold for paying capital gains tax will be halved to £6,000. 

Also, the stamp duty cuts announced in the mini-budget will remain in place but only until March 31 2025.

The Chancellor told the Commons: ‘The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-budget will remain in place but only until March 31 2025.

‘After that, I will sunset the measure, creating an incentive to support the housing market and all the jobs associated with it by boosting transactions during the period the economy most needs it.’

The Chancellor said he would add an extra £6 billion of investment in energy efficiency from 2025 to help meet a new ambition of reducing energy consumption from buildings and industry by 15 per cent by 2030. 

PENSIONERS GET OLD-AGE BENEFIT BOOST – BUT COULD FACE A LONGER WAIT FOR THEIR MONEY ALONGSIDE COST-OF-LIVING PAIN

Rishi Sunak this week talked the talk by saying pensioners were ‘at the forefront of my mind’ and Jeremy Hunt today walked the walk as he protected age-related benefits from inflation.

The Chancellor confirmed that the ‘triple lock’  that links the state pension rate to the highest out of three values: inflation, wage increases and 2.5 per cent, would be retained.

With inflation currently at an eye-watering 11.1 per cent that means that keeping the lock will cost billions in extra payouts for the elderly.

But alongside this carrot he also announced a review of the current state pension age of 66. 

Members of Mr Sunak’s Cabinet including Michael Gove have previously warned against going back on the manifesto commitment, which could have been unpopular with older, predominantly Tory voters. 

State pensions increased by 3.1 per cent this year, after the triple lock was temporarily suspended for a year.

However it is not all good news for pensioners. Along with working age homeowners they face an increase in energy bills, set to rise from an average of £2,500 to £3,000 in April as Government aid is tapered off over the course of a year.

That is almost treble the £1,042 average bill in April 2020, which has been sent rocketing by the impact of the war in Ukraine on gas supplies.

Additionally, a universal one-off payment of £400 this winter will not be repeated, meaning millions will be an average of £900 worse off in total.

The Resolution Foundation’s Intergenerational Audit concludes over-75s are expected to spend 8 per cent of their total household income on bills as they are more likely to live in larger and energy-inefficient homes. 

YOUNGER RENTERS WILL STRUGGLE MOST WITH BILLS  

There was little good news for younger renters in the statement either. 

They will be affected by income tax rate threshold freeze the same as everyone else of working age. And they are likely to bear the brunt of changes to energy bills help. 

Increases to council tax will also affect them, both directly, and indirectly if landlords factor rises into their rent. 

The Resolution Foundation’s Intergenerational Audit found that younger generations, who have seen years of stalled pay growth and high housing costs, will struggle the most as they are four times more likely to be on pre-payment meters and are less likely to have assets and savings that could see them through.

Molly Broome, of the Resolution Foundation, said: ‘All generations are facing difficulties from the growing cost-of-living crisis – but different generations are experiencing it in very different ways.

‘Energy bills are set to rise by over 80 per cent this winter, compared to pre-crisis levels.

‘The middle-aged will face the largest bill rises and older generations will see the greatest squeeze on their incomes due to their larger and less energy-efficient homes.

‘But it’s younger people who are most likely to struggle to pay rising bills, because they are less likely to have savings to fall back on – and will therefore be forced to either rely on older friends or family members, or potentially go without heating during the coming cold weather.