THURSDAY 17/11/22 - AUTUMN STATEMENT – HEADLINES

Following the Chancellor’s Autumn Statement where we knew difficult decisions on spending had to be taken, we are pleased to give you Morris Lane’s summary of the main changes.

Whilst there are no new direct increases in income or corporation tax that have not previously been announced, the continued freezing of the personal allowance and tax band rates will bring more taxpayers into the higher tax bracket over time.  As a result we believe lower and middle income earners will be hardest hit by the measures proposed.

Combined with the Bank of England’s recent comment on further interest rate rises and uncertainty on energy prices we also expect consumers to be more cautious in the months ahead. A possible silver lining to this is that inflation should come down and with job losses set to increase it may also bring some relief to businesses who have struggled with recruitment issues in recent years.

 

  • INCOME TAX

The level of income at which taxpayers start paying the 45% income tax rate will be reduced from £150,000 to £125,140 per annum from April 2023.

  • DIVIDEND TAX

The tax-free dividend allowance of £2,000 per annum will be reduced to £1,000 from April 2023 and to £500 from April 2024.

  • CAPITAL GAINS TAX

The annual exempt amount for capital gains – currently £12,300 per annum – will reduce to £6,000 from April 2023 and to £3,000 from April 2024.

  • STAMP DUTY LAND TAX
The changes announced on 23 September 2022 will now become temporary reductions expiring on 31 March 2025.
  • IR35
The 2017 and 2021 reforms to the off-payroll working rules are reinstated.
  • ELECTRIC CARS
    • Will no longer be exempt from Vehicle Excise Duty from 2025.
    • Employment benefit in kind to increase by 1% per annum up to 2027/28 to amaximum of 5%.
    • First year allowance for electric vehicle charge points extended to April 2025.
  • CORPORATION TAX
25% from April 2023 with 19% small profits rate.

  • CAPITAL ALLOWANCES
Annual Investment Allowance still permanently set at £1m from April 2023.

  • RESEARCH AND DEVELOPMENT TAX RELIEFS

From 1 April 2023:-
    • Research and Development Expenditure Credit (RDEC) will increase from 13% to 20%.
    • SME additional deduction to decrease from 130% to 86% and credit rate from 14.5% to 10%.
  • ENERGY SUPPORT FOR BUSINESSES

There will be a new targeted approach to support businesses from April 2023.

  • BUSINESS RATES

Support for eligible retail, hospitality and leisure businesses to be increased from 50% to 75% in 2023/24 for business rates up to £110,000 per business.

Transitional relief to be introduced for increases in rates caused by changes in rateable values in 2023 and also impact on Small Business Rates Relief.

  • FROZEN THRESHOLDS AND RATES

The following are frozen until April 2028:-

    • The personal allowance of £12,570 per annum.
    • Taxpayers start paying the 40% income tax rate when their income exceeds £50,270 per annum.
    • National Insurance thresholds.
    • Employment Allowance at £5,000 (to April 2026).
    • The inheritance tax nil-rate band of £325,000, residence nil-rate band of £175,000 and residence nil-rate taper threshold of £2m.
    • The VAT registration threshold of £85,000 turnover per annum and deregistration threshold of £83,000 turnover per annum (to April 2026).

  • NATIONAL LIVING WAGE AND NATIONAL MINIMUM WAGE

The National Living Wage (i.e. the minimum wage for workers over 23) will increase from £9.50 to £10.42 from April 2023. This equates to a pay rise of £1,600 per annum for a full-time worker.

Other National Minimum Wage rates from April 2023:-



    • 21-22 years – increasing from £9.18 to £10.18 per hour.
    • 18-20 years – increasing from £6.83 to £7.49 per hour.
    • 16-17 years – increasing from £4.81 to £5.28 per hour.
    • Apprentice rate – increasing from £4.81 to £5.28 per hour.


OTHER MATTERS

    • New fiscal rules relating to public sector debt.
    • Annual Tax on Enveloped Dwellings (ATED) to be increased by 10.1% for 2023/24.
    • Car benefit in kind to be increased by 1% in 2025/26 to a maximum of 37%.
    • Van benefit charge and car and van fuel benefit charges will increase in line with CPI from April 2023.
    • Adult Social Care: additional £1bn 2023/24, increasing to £1.7bn 2024/25 through Better Care Fund and local authorities. Dilnot reforms to be delayed to October 2025.


Based on the Chancellor’s Budget Speech 17 November 2022 and is subject to amendment.

May differ in Wales and Scotland