Autumn Statement 2022

The Chancellor, Jeremy Hunt used the Autumn Statement yesterday to attempt to calm markets and reset public finances with a series of tax rises achieved through cuts and freezes to allowances.

In his first few days in office, he had already reversed most of the measures announced in his predecessor’s September Mini Budget. But he went further by cutting the CGT annual exemption, lowering the additional rate threshold to £125,140 and extending the freezing of other allowances by a further two years.

It is apparent that with some of the key personal allowances frozen and reduced, it’s never been so important to take financial advice to ensure you are using all the tax efficient investments available to benefit you and the whole family.

Highlights of the statement are detailed below:

What it means for you as an individual

Income Tax

The tax-free personal allowance remains at £12,570 and the higher rate tax threshold is £50,270. These thresholds have been frozen until 2028. The 45% additional rate tax threshold will be lowered from £150,000 to £125,140 from 6 April 2023.

With the additional rate threshold being reduced from April 2026 to £125,140 (previously £150,000) this will have the following impact on high earners:

The above changes will apply to taxpayers in England, Wales, and Northern Ireland.

The dividend allowance currently £2,000 but originally introduced at £5,000, sheltering dividend receipts from tax will be reduced from April 2023 to £1,000. This will fall further to £500 from April 2024.

Autumn Statement 2022

This will cost savers the following when compared with the current £2,000 allowance:

Savings and dividend income allowances – rates apply UK-wide.

National Insurance (NI)

The NI earnings thresholds have been frozen until April 2028, but the 1.25% additional Social Care Levy that was scrapped in September has not been reinstated.

The Upper Secondary Threshold will stay fixed at £50,270 per annum until April 2028.

Class 2 national insurance will be set at £3.45 per week and class 3 rate set at £17.45 per week for tax year 2023/24.

Inheritance Tax

The Inheritance Tax Nil Rate Band and additional Residence Nil Rate Band will be frozen at £325,000 and £175,000 respectively for a further two years until April 2028.

Pension allowances

There has been no significant change to pensions; the headline Annual Allowance remains at £40,000 and the Lifetime Allowance remains frozen at £1,073,100 until April 2026.

State Pension

The Pensions Triple Lock has been protected and the State Pension will go up by £870 from April 2023, an increase of 10.1% in line with inflation. The government is also reviewing the State Pension age and will publish their review in early 2023.

The current and new weekly rates are shown below:

Dividend Tax allowance

This is being reduced from £2,000 per year to £1,000 per year from April 2023 and to £500 per year from April 2024.

Capital Gains Tax

The annual Capital Gains Tax exemption will reduce from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024.

This £6,300 reduction costs taxpayers £630 at basic rate (£1,134 with 8% property surcharge) and £1,260 at higher rate (£1,764 with 8% property surcharge).

The £9,300 reduction from 2024 costs £930 (£1,674 with property surcharge) and £1,860 (£2,604 with property surcharge). Autumn Statement 2022

Appended below is a Tax Table for your information:

Stamp Duty Land Tax

Stamp Duty changes announced in the previous Budget will remain until March 2025. In England and Northern Ireland, the Stamp Duty threshold is £250,000 and the first-time buyer threshold is £425,000 on properties under £625,000.

Tax on electric vehicles

From April 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty and Company Car Tax rates will increase, although they will remain lower than tax rates on traditional combustion engine cars.

What it means for a business

Windfall Tax

Windfall Tax on the profits of oil and gas firms will increase from 25% to 35% until March 2028. There will be a new temporary 45% levy on electricity generators from January 2023 until March 2028. The Chancellor expects this to raise an extra £14 billion.

Business Rates

Properties will be revalued for business rates from April 2023, but there will be significant government support for firms including a new relief scheme. The government says that two thirds of properties will not pay any more in business rates.

VAT threshold

The VAT registration threshold will be maintained at £85,000 for a further two-year period from April 2024 and the headline rate of VAT remains at 20%.

Living Wage increase

The National Living Wage will rise from £9.50 per hour for over 23’s to £10.42 from April 2023, an increase of 9.7%.

National Insurance (NI)

The National Insurance employment allowance of up to £5,000 is frozen until April 2028.

Energy Price Guarantee

While this has been extended for households for a further 12 months from April 2023 (albeit at a less generous level), there has been no further support announced for businesses. The current relief ends in March 2023.

We trust this summary is of benefit; we will update you further, if/when more major changes are made…  The information in this communication is not intended to provide advice.  If advice is required, we are here to help and support your needs.  Simply get in touch and we will do our very best to assist you.

This email does not constitute personal advice. If you are in doubt as to the suitability of an investment, please contact a financial adviser.

Tax rates and reliefs depend on individual circumstances and are subject to change.

Whilst we ensure the information contained within this email is accurate and up to date, no warranty is given as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information.

Best Wishes

Richard and the Best Price FS Team