The Chancellor, Jeremy Hunt, released the Autumn Statement on 17th November 2022.
We have highlighted some of the key details of the statement.
Personal Income Tax
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Tax free personal allowance and 40% tax threshold fixed until 5 April 2028 at £12,570 and £50,270 respectively.
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45% additional rate threshold dropped from £150,000 to £125,140.
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Dividend tax rates to remain the same at 8.75% basic, 33.75% higher, and 39.35% additional rate. With the 39.35% coming in at income above £125,140.
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Dividend tax free allowance to drop from £2,000 to £1,000 from 6 April 2023, and to £500 from 6 April 2024.
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For a business owner who takes profits mainly from dividends and has income between £50,000 – £125,140 will pay £337 more tax in 2023/24.
Employees
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Car benefits remain fixed until the end of 2024/25.
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Electric car and ultra-low emission car’s (<75g/km CO2) benefit in kind percentage will increase 1% in 2025/26, 1% in 2026/27 and 1% in 2027/28, up to a maximum percentage of 5% for electric cars and 21% for ultra-low emission cars.
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Rates for all other vehicle bands will increase by 1% for 2025/26 up to a maximum of 37%, and will then be fixed in 2026/27 and 2027/28.
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From 6 April 2023 the taxable amount for an employee’s private use of fuel in a car or van and for the use of a van will increase inline with the consumer price index, by 10.1%.
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The national living wage and the national minimum wage will increase from 1 April 2023. New hourly rates are, age 23+ £10.42, age 21-22 £10.18, age 18-20 £7.49, age 16-17 £5.28, apprentices £5.28.
National Insurance
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The secondary threshold and upper earnings limit will remain fixed until 5 April 2028 at £9,100 and £50,270 respectively.
Savings and Pensions
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No announcements were made to restrict tax relief on pension contributions other than what is already in place.
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The state pension will be uprated by inflation from April 2023.
Capital Gains Tax
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The annual exemption is being reduced from £12,300 to £6,000 for 2023/24 and then to £3,000 for 2024/25.
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This will bring more taxpayers into the criteria to report capital gains.
Inheritance Tax
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The current nil rate band and residence nil rate band is frozen at £325,000 and £175,000 respectively until April 2028.
Corporation Tax
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The annual investment allowance of £1,000,000 is to remain permanent.
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The corporation tax rate will remain at 19% until 31 March 2023.
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The corporation tax rate will then rise to 25% for companies with profits over £250,000 from 1 April 2023.
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The small profits rate will remain at 19%, the small profits threshold is £50,000.
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Profits between £50,000 and £250,000 will be tapered, making the effective marginal rate between £50,000 and £250,000 26.5%.
Research and Development
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For expenditure on or after 1 April 2023 the additional deduction will decrease from 130% to 86%, and the payable tax credit will decrease from 14.5% to 10%.
VAT
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The registration threshold remains fixed at £85,000 until 31 March 2026.
Freezing
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The Autumn Statement has seen many thresholds and allowances frozen for a number of years.
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Although these are not direct tax increases, due to inflation, they take more people and businesses into higher rates of tax over time.
If you have any questions or concerns about how the changes made in the Autumn Statement may effect you, your business or your employees please call us on 01245 801611 or contact us here.
