On 17th November 2022 the Chancellor, Jeremy Hunt delivered the Autumn Statement on behalf of the Government.

What key changes were announced and how will they impact you?

 


Income tax

The Chancellor was quick to point out that there are no increases to the headline rates of tax.  However, this does not mean that individuals won’t pay more income tax, quite the opposite in fact.

The income tax thresholds are already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028.

  • The Personal Allowance and Lower Profits Limits will remain at £12,570
  • And the Higher Rate Threshold and Upper Profits Limit will remain at £50,270
  • The additional rate threshold will be lowered from £150,000 to £125,140.

 

From April 2023 the rates and bands are as follows:

BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateover £125,14145%

Dividend Allowance

The government will reduce the Dividend Allowance:

  • from £2,000 to £1,000 from April 2023
  • and to £500 from April 2024

 

The Dividend Tax Rates were increased earlier this year and remain at the uplifted levels:

  • Basic rate            8.75%
  • Higher rate         33.75%
  • Additional rate  39.35%

Capital Gains Tax Annual Exempt Amount

The government will reduce the Capital Gains Tax Annual Exempt Amount:

  • from £12,300 to £6,000 from April 2023
  • and to £3,000 from April 2024

National Insurance

The National Insurance thresholds are already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028.

  • The Lower Earning Level will remain at £6,396 per annum (£123 per week)
  • From July 2022 the NICs Primary Threshold (PT) and Lower Profits Limit (LPL) were increased to £12,570 and will be maintained at this level from April 2023 until April 2028.
  • Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) will remain at £50,270
  • The Class 2 rate will be increased to £3.45 per week

Employers NIC

  • The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.
  • The employment allowance will remain at the current level of £5,000.

Corporation Tax

As previously confirmed, the planned increase in the Corporation Tax rate to 25% for companies with over £250,000 in profits will go ahead.

The Corporation Tax rise in April 2023 will only affect the most profitable companies because of the Small Profits Rate (we’ll send out more information on this in the New Year).

VAT

  • The VAT registration threshold will remain at £85,000 for two years from April 2024.
  • The VAT de-registration threshold will also remain unchanged at £83,000

National Living Wage (NLW) and National Minimum Wage (NMW)

The government will increase the NLW for individuals aged 23 and over by 9.7% to £10.42 an hour from 1 April 2023.

Energy Price Guarantee (EPG)

From April 2023, the government will adjust the EPG, which places a limit on the price households pay per unit of gas and electricity.

This means that a typical household in Great Britain will pay £3,000 per annum (up from the current £2,500 per annum) from April 2023 to April 2024,

Company Car Tax Rates

The government is setting rates for Company Car Tax until April 2028 to provide long term certainty for taxpayers.

  • Rates will continue to incentivise the take up of electric vehicles but expect to see these increase by 1% each year up to a maximum percentage of 5% by 2028.
  • Electric vehicles will no longer be exempt from vehicle excise duty from April 2025.

First Year Allowance for Electric Vehicle Chargepoints

The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle chargepoints to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

This will ensure that the tax system continues to incentivise business investment in charging infrastructure.

Stamp Duty Land Tax cuts

On 23 September 2022, the government increased the nil rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000.

The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000.

These changes only apply now until 31st March 2025.

Inheritance Tax

The nil-rate band will be frozen at £325,000, and the residence nil-rate band will continue at £175,000 until 2028.

This means that an individual can pass on up to £500,000 to their next of kin (or £1million where there is a surviving spouse) without an inheritance tax liability.

 


Reference

For the full Autumn Statement 2022 policy documents visit  Budget documents.

Or to discuss how the changes will impact you and your business give us a call on 01737 652 852.