“The 6.6% increase in the National Living Wage, public sector pay rises, £130 billion infrastructure investment programme and Net Zero initiatives had already been well trailered and do not seem to be making much of an impact, from the narrow perspective of financial markets, even if they may be welcomed by many.
“No doubt consumers will also be pleased by the decision to scrap the planned increase in fuel duties, which will keep those unchanged for the 12th year in a row. Whether this fits comfortably with the green agenda that will be proposed at next week’s COP26 summit in Glasgow – and indeed the Government’s own Net Zero agenda – will doubtless become a matter for debate, as it hardly encourages habitual drivers to change their behaviour. But it does show how any Government will have to try and balance the long-term goal of Net Zero with short-term economic impacts upon those who live rurally or work out of town and no choice but to drive.”
Personal finances
Tom Selby, head of retirement policy at AJ Bell:
Good news for people in net pay pension schemes
“The Government’s flagship automatic enrolment reforms risked being fundamentally undermined by an anomaly in the system which means well over 1 million of the UK’s lowest paid workers miss out on pension tax relief each year.
“This anomaly exists because certain pension schemes operate on a ‘net pay’ basis, meaning pension contributions are paid directly from people’s salaries before tax has been applied. In theory, this should ensure they receive tax relief at their marginal rate automatically.
“This approach simply doesn’t work for those earning below the personal allowance (currently £12,570) as their marginal rate of tax is 0%.
“Today’s solution will mean that, from 2024/25, HMRC will top-up pension contributions for those who miss out on the tax relief they are entitled to. An estimated 1.2 million people will be able to reclaim £53 on average in 2025/26 as a result of the shift.
“While the fact the Treasury has settled on a solution to this scandal should be welcomed, the slow pace of delivery will likely be criticised.
“It is also not exactly clear what information those affected will need to provide to HMRC in order to get their average £53 rebate. It is vital this process is as made as straightforward as possible to ensure maximum take-up.”
