17 Nov Autumn Statement 2022

Below is a summary of the key parts of the Autumn Statement:

Personal & employment taxes

Income tax (excludes Scotland)
In a move which means ‘those earning £150,000 or more will pay just over £1,200 extra a year’, the threshold for people paying the top rate of tax (45%) is to drop from £150,000 to £125,140.

The income tax personal allowance and the main National Insurance (NI) thresholds have also been frozen for a further two years to April 2028. The Employment Allowances for NI will be retained at the higher £5,000 level until March 2026.

Dividend tax
There is going to be a 50% reduction in the current dividend allowance (£2,000 to £1,000) from April 2023. When you combine this increase with the corporation tax rise to 25% from next April, the announcement will have a big impact on entrepreneurs and small business owners who extract sums by way of dividend from companies. The allowance will also drop by a further 50% to £500 from April 2024.

Capital Gains Tax (CGT)
The Annual Exempt Amount for CGT on ‘chargeable assets’ will drop from £12,300 to £6,000 next year and then to £3,000 from April 2024.

Inheritance tax (IHT)
The IHT rate has been frozen since 2009 and subsequently hasn’t kept pace with inflation. The current rate means 40% tax is due on estates over £325,000. This threshold is staying in place until April 2028, with more people falling under the criteria for payment as a result.

Company cars
Electric vehicles (EVs) will no longer be exempt from Vehicle Excise Duty from April 2025. Also, company car tax rate increases to be limited to 1 percentage point per year for three years from 2025.

Stamp Duty Land Tax (SDLT)

Cuts announced by Kwasi Kwarteng in September 2022 will end on 31 March 2025 and will not be permanent.

Business taxes

Research & Development (R&D)
The R&D tax relief for SMEs will see a deduction rate cut to 86% from 130%, as well as the credit rate being reduced to 10% from 14.5%. There will, however, be an increase in the rate of the separate R&D expenditure credit from 13% to 20%.

Corporation tax
The corporation tax rate rise from 19% to 25% will go ahead as planned next April.

Business rates
Representing a £14bn tax cut over the next five years, nearly two thirds of properties will not pay any extra business rates next year. Business Rates multipliers will be frozen in 2023/24 and there will be extended and increased relief for businesses in the retail, hospitality and leisure sectors. That relief will increase to 75 per cent.

VAT threshold
The current VAT registration threshold of £85,000 to stay in place until March 2026.

Tariff suspensions
Tariffs will be removed on over 100 goods for two years. The measure will remove tariffs as high as 18% on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.

Windfall taxes
With the energy crisis still ongoing and profits soaring for companies operating in this sector, there’s been a 10% increase in tax for oil and gas producers (now 35%). There is also a new, temporary 45% levy for electricity generators.

National Living Wage, Energy and Pensions

National Living Wage (NLW) and National Minimum Wage (NMW) – the Chancellor announced he would increase the rates for those aged 23 and over by 9.7 per cent to £10.42 an hour from 1 April 2023.

Meanwhile, the rate of NMW for those aged 21 and 22, 18 to 20, and 16 and 17 will rise to £10.18, £7.49, and £5.28 an hour respectively. The apprentice rate will also rise to £5.28 an hour.

The current Energy Price Guarantee (EPG) will remain in place until April 2023, limiting typical energy bills to £2,500 per year. From April 2023, the EPG will rise to £3,000 for the typical household.

The State Pension Triple Lock will remain in place, meaning the State Pension will rise in April 2023 in line with September 2022’s rate of CPI – 10.1 per cent.

If you have any queries, please get in touch.