THE AUTUMN STATEMENT 2022
The Autumn Statement 2022 – The details you need to know
The statement, which was presented by the Chancellor Jeremy Hunt, announced
PERSONAL TAXES
The current tax-free Personal Allowance of £12,570 will be frozen until 2028. This is a two year extension.
The higher rate tax threshold will also be frozen until 2028. The 40% tax rate will be payable on all non-savings and savings income between £50,270 and £125,140.
The threshold for the highest rate of tax will fall from £150,000 to £125,140. The additional tax rate of 45% will be payable on all non-savings and savings income above the £125,140, so any individual already paying the 45% rate in 2022/23 will face an income tax increase of at least £1,243 for 2023/24.
Income tax, National Insurance and Inheritance Tax thresholds will be maintained at their current levels for a further two years until April 2028.
The Married Couple’s allowance and Blind Person’s allowance will rise by 10.1% along with inflation.
Dividend income tax free allowance will be cut from £2,000 to £1,000 from April 2023 and then £500 from April 2024. The tax rate that applies to dividends will depend on an individuals tax band, with current rates continuing in the future years at 8.75% for basic rate taxpayers, 33.75% for higher rate tax payers and 39.35% for additional rate payers.
Capital gains tax annual exemption reduced from £12,300 to £6,000 from April 2023 and down to £3,000 from April 2024. The reporting proceed exemption amount will remain at £50,000.
Inheritance tax nil-rate band of £325,000 and residence nil-rate band of £175,000 will be frozen until April 2028.
BUSINESS TAX
The planned rise in Corporation tax from 19% to 25% will go ahead from April 2023. Small companies reporting profits of £50,000 will pay tax at 19%. Companies reporting over £250,000 will pay tax at 25%. The businesses in between these rates will be able to claim marginal relief which was in place over a decade ago. We will provide a further article on this when the full detailed guidance has been released. Clients with multiple companies will have to revisit the efficiency of structure under this change.
RESEARCH & DEVELOPMENT (R&D)
The government is cutting the enhanced deduction for small and medium sized businesses (SMEs) from 130% to 86%, and the rate of payable credit available to loss-making SMEs will reduce from 14.5% to 10%.
For large companies the rate of R&D expenditure credit (RDEC) has been increased from 13% to 20%.
VAT
The thresholds for registration of £85,000 and £83,000 for deregistration is to remain until March 2026. With the current rate of inflation, this will see more and more businesses being dragged into the VAT net. These thresholds have been unchanged since 1 April 2017.
DIVERTED PROFITS TAX
From April 2023, the rate of Diverted Profits Tax will increase from 25% to 31% in order to maintain a 6% differential above the main rate of Corporation Tax. This should ensure that it remains an effective deterrent against diverting profits out of the UK.
BUSINESS RATES
From April 2023, rateable value of non domestic properties in England will be updated to reflect the property market at 1 April 2021. A set of reliefs including the freezing of multipliers and percentage caps an annual business rates will be introduced. Refer to HMRC guidance for the tables and details.
STAMP DUTY
For purchasers of residential property in England and Northern Ireland, the current rates will be made temporary, ending on 31 March 2025.
ANNUAL TAX ON ENVELOPED DWELLINGS (ATED)
The 2023/24 annual chargeable amounts will be increased by the September 2022 CPI increase figure of 10.1%.
EMPLOYMENT TAX
The chancellor stated no change to the Employment allowance, and this is to remain at the higher rate of £5,000 per annum.
From April 2023, the secondary threshold for National Insurance will be fixed at £9,100, meaning that, employers will only pay 13.8% NIC’s on employees after this point, and this will be frozen until April 2028.
The National Living Wage (NLW) increased by 9.7% up to £10.42 per hour from April 2023. The largest ever rise in the national living wage.
The benefit in kind on electric company cars will increased. The BIK will rise to 3% for 2025/26, 4% for 2026/27 and 5% for 2027/28. Similarly, all non electric vehicles will see the same 1% increase.
OTHER
From April 2025, electric cars will no longer be free from Vehicle Excise Duty (road tax).
Universal Credit and The Pension Credit will increase along with inflation by 10.1%.
The State pension triple lock will be reinstated for 2023-24. This will mean that, on average, a pensioner will better off by £870 a year.
If you require any further detail on any of this article, please contact the Spirare Team.