The Chancellor Jeremy Hunt’s Autumn Statement was prepared with the intention to bring stability, protect growth in the economy and continue to fund public services. Taxes have increased mainly by freezing thresholds rather than increasing rates. Growth has been encouraged through investment in energy efficiency, infrastructure and targeted support for businesses.
I present below, the key points of the announcements together with an understanding of what this could mean for you and your business:
Income Tax
- The Personal Allowance will remain at £12,570 until 5 April 2028.
- The higher rate threshold will stay at £50,270 until 5 April 2028.
- From 6 April 2023, the threshold for the highest rate of tax will fall from £150,000-£125,140.
- Individuals with income of more than £100,000 will continue to have their Personal Allowance tapered with those on incomes of more than £125,140 not been entitled to any Personal Allowance.
- From 6 April 2023, the Blind Persons Allowance will increase to £2,870.
Dividend Tax
- From 6 April 2023 the Dividend Allowance will reduce to £1,000.
- From 6 April 2024 the Dividend Allowance will reduce to £500.
- There were no changes to the rates of tax applicable to Dividend Income, the rates are:
- Basic Rate Taxpayers – 8.75%
- Higher Rate Taxpayers – 33.75%
- Additional Rate Taxpayers – 39.35%
Capital Gains Tax
- From 6 April 2023, the tax-free Capital Gains Annual Exemption will reduce to £6,000.
- From April 2024, the tax-free Capital Gains Annual Exemption will reduce to £3,000.
- Rates of Capital Gains Tax payable gains above Annual Exemption remain unchanged at between 10% to 28%, depending on the individual’s level of income and type of assets sold.
Inheritance Tax
The deceased’s estate valued at below £325,000 is not subject to Inheritance Tax. Any estate valued at above £325,000 is taxed at 40% (the rate is applicable to the amount above £325,000). There is also the residence nil rate band which increases the tax-free allowance by £175,000 the family home is passed to children/grandchildren. All thresholds and rates remain unchanged until 5 April 2028.
Taxation of Company Cars
Although the Government still wish to encourage the use of electric vehicles rather than traditional fueled cars, the increase in electric vehicles being provided as company cars has resulted in the Chancellor revisiting this area.
Electric vehicles provided by employers are taxed as a benefit in kind at a rate of 2% of the list price, the Government have committed to retaining this rate until 5 April 2025. Beyond this time, the taxation of electric cars will increase as follows:
- 2025/2026 – 3%
- 2026/2027 – 4%
- 2027/2028 – 5%
Non-electric vehicles will also see the same 1% increase over the same timescale.
Fuel Duties
Although the Chancellor did not make any comment on fuel duties, it is understood that the temporary 5p per litre reduction for 2022/2023 will end on 5 April 2023. Furthermore, automatic fuel indexation will be allowed to take effect, resulting in a total duty rise of around 12p per litre.
National Insurance Contributions (“NIC”)
- NIC nil band has increased from £9,880 to £12,570.
National Living Wage Increase
- The National Living Wage will increase to £10.42 per hour with effect from 6 April 2023.
State Pensions and Social Security Benefits
- State Pensions and the standard minimum income guarantee in pension credit will increase by 10.1% from 6 April 2023.
- Plans to create a housing element of pension credit to replace pensioner housing benefit is intended to take effect from 6 April 2028.
- The Benefit Cap will rise to £22,020, nationally and to £25,323 in Greater London, for families.
- The single adults the Cap will rise to 14,007 and £53, nationally and £16,967 in Greater London.
- Households on means tested benefits will receive an additional £900 in 2023/2024.
- Pensioner households will receive an extra £300 cost of living payment and individuals on disability benefits will get an extra £150 disability cost of living payment
Energy Price Support
- The Domestic Energy Price Guarantee will increase to £3,000 for one year from 1 April 2023.
Council Tax in England
- Local Authorities in England will be able to increase Council Tax by up to 3% per annum from April 2023.
- Any increases beyond 3% will require the Council to hold a referendum.
Stamp Duty Land Tax (“SDLT”)
For purchasers of residential property in England and Northern Ireland, the following measures on SDLT will be made temporary and end on 31 March 2025:
- the increase in the SDLT Nil rate threshold from £125,000 to £250,000.
- the increase in the SDLT Nil rate threshold from £300,000 to £425,000 for first-time buyers
- the increase in the maximum purchase price for relief for first time buyers from £500,000 to £625,000.
Employers National Insurance Contributions
- the level at which employers start to pay national insurance contributions for employees will remain at the current £9,100 level until April 2028.
- The Employment Allowance will remain at £5,000.
Value Added Tax (“VAT”)
- VAT registration threshold to remain at £85,000 until 1 April 2026.
- VAT deregistration threshold to remain at £83,000 until 1 April 2026.
Business Rates
- Business rates bills in England to be updated from April 2023 to reflect property values on 1 April 2021.
- Transitional relief to support businesses as they move to their new bills will be provided for five years
- Support for eligible retail, hospitality and leisure businesses to be extended and increased from 50% to 75% business rates relief up to £110,000 per business from 6 April 2023.
- Increases in bills to be capped at £600 a year from 1 April 2023 for small businesses.
- An Improvement Relief to be introduced from 6 April 2024. This will ensure that ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to the properties that they occupy.
Online Sales Tax
The Government decided not to introduce an Online Sales Tax.
Research & Development Tax Relief (“R&D”)
For R&D expenditure after 31 March 2023:
- R&D expenditure credit rate will increase from 13% to 20%.
- The small and medium-sized enterprises additional deduction will decrease from 130% to 86%; and
- The small and medium-sized enterprise credit rate will decrease from 14.5% to 10%
HMRC & Tax Avoidance
The Chancellor announced a package of measures to tackle tax avoidance, evasion and wider non-compliance. The package includes:
- A £17.9 million fund for additional staff to tackle more cases of serious tax fraud as well as wealthy taxpayers non-compliance.
- HMRC’s challenge of taxpayers liabilities through a series of campaigns and nudge letters.
- HMRC devoting resources to tackle fraudulent and erroneous R&D tax claims.
Nudge Letters
Nudge letters are designed to prompt taxpayers to reconsider whether they need to pay more tax to HMRC. They are usually issued when HMRC has information that suggests that tax returns are incomplete. HMRC receives its data from overseas tax authorities about people’s non-UK bank interest, discrepancies between Companies House data and tax returns.
In conclusion
This summary represents some of the announcements (that are relevant to readers) made by the Chancellor, Jeremy Hunt, in his Autumn Statement on 17 November 2022.
This summary is for general information only. You are recommended to seek competent professional advice before taking or refraining from taking action on the basis of the contents of this article. The guide represents our understanding of the law and HM Revenue & Customs practice as at 17 November 2022, which may be subject to change.
