Following on from the mini budget which caused chaos in the markets, the Chancellor Jeremy Hunt has now changed tack with the aim of restoring stability whilst promoting growth and protecting public services.
He has attempted to do this by a mix of public sector budget deductions and increases in taxes – the latter achieved more by freezing and reducing thresholds rather than actual increases in the headline rates of tax. Mr Hunt wants to avoid the austerity that followed the 2008 financial crash and is focused on measures that will keep the period of recession as short as possible.
We have provided a summary for our clients of the main points from the Autumn Statement below.
Energy industry companies have been charged with an expanded windfall tax of 35% up from 25%.
Employers annual allowance for NIC frozen at £5,000 until April 2028.
Employer NIC contribution levels frozen.
R&D tax relief for SMEs deduction rate cut from 130% to 86% and the repayable credit rate to 10%.
Business rates tax cuts to 700,000 businesses in retail, hospitality and leisure.
National Living Wage for over-23s increases to £10.42/hour from April next year.
VAT threshold to remain at the same level for 2 years.
Income tax personal allowance threshold frozen until 2028.
More to pay 45% income tax. The threshold for the 45p additional rate of tax will be cut from £150,000 to £125,140 from 6 April 2023.
Income tax, National Insurance and Inheritance Tax thresholds frozen for additional two years to April 2028 (these were already frozen until 2026).
Tax free dividend allowances to be reduced from £2,000 in 2022/23 to £1,000 in 2023/24 and further reduced to £500 in 2024/25.
Capital gains tax free threshold to reduce from £12,300 to £6,000 in 2023/24 and further reduced to £3,000 for 2024/25.
Domestic energy price guarantee will continue but increase from £2,500 to £3,000 from April 2023 (i.e. provide less subsidy).
In good news, we did not see measures to further restrict tax relief for pension contributions. Please do talk to us about how your pension contribution strategy could help to lessen the impact of the above income tax changes.
In all matters, we are here to help you. Please do get in touch about any of the Autumn Statement measures or otherwise. You can contact us here. We look forward to helping you. You can also see the full Autumn Statement on the HMRC website here.
Get in touch with Barnett Ravenscroft
If you would like to discuss any of these latest developments in more detail, our team would be delighted to hear from you.
