The latest Chancellor Jeremy Hunt delivered his Autumn Statement on Thursday, 17th November 2022. With a £55bn ‘gap’ in the UK’s finances, we expected increased taxation and cuts to public sector spending. Across the board, he delivered freezes to rates (in-direct tax increases) Here are the key changes that were announced.
Corporation Tax
Previously announced increases to corporation tax rates for the financial year, 2023 onwards will come into effect as planned following the reinstatement of the CT increase after the mini-budget fiasco.
From April 2023, banks will be subject to the bank surcharge at 3% on profits in excess of £100m (increasing the combined rate of corporation tax and surcharge by 1% point to 28%) and the diverted profits tax will be increased to 31% (maintaining the 6% point differential with the main rate of corporation tax).
Income Tax
Additional Rate Threshold
From the 6th April 2023, the additional rate threshold for income tax will be reduced from £150,000 to £125,140 and will continue to be taxed at the 45% rate.
This applies to English, Welsh, Northern Irish and non-resident taxpayers.
Scottish taxpayers pay a different rate.
Details of any changes to Scottish taxpayers will be announced in the Scottish Budget on 15th December 2022.
Shareholders of Limited Companies, with expected income between £125,140 and £150,000 may wish to consider additional dividends (if available) prior to 5th April 2023, in order to increase their taxable income in 2022/23 to ensure more income is taxed at 40% rather than 45%.
Personal Allowance threshold
The personal allowance of £12,570 will now be frozen until 5th April 2028.
The higher rate threshold will now be frozen at £50,270 until 5th April 2028
Income Tax Relief
The maximum amount on which income tax relief is calculated for maintenance payments will be £4,010 for the year ending 5th April 2024.
Married Couple’s Allowance
The married couple’s allowance will change from between £3,640 and £9,415 in the year ending 5th April 2023, to between £4,010 and £10,375 for the year ending 5th April 2024.
Additional thresholds to be aware of
Dividends Tax
The Dividend Tax-Free Allowance will reduce from £2,000 to £1,000 from 6th April 2023. This will further reduce to £500 from 6th April 2024.
Capital Gains Tax (CGT)
The Capital Gains Tax annual exempt amount with reducing from £12,300 to £6,000, from 6th April 2023, then to £3,000 from April 2024. If you are looking to close your business by MVL (Members Voluntary Liquidation), it may be more tax efficient to do this prior to 5th April 2023.
Inheritance Tax
The Inheritance Tax nil rate band will be frozen for a further two years, until 5 April 2028 at £325,000 and £175,000 respectively
National Insurance Contributions (NIC)
NIC for an employed person will be frozen until 5th April 2028, but the Class 4 NIC for self-employed persons lower profits threshold, will increase to £12,570 on the 6th April 2023. NIC Class 3 weekly voluntary contributions for the year ended 5th April 2024, will be £17.45 (increased from £15.85 per week in the year ended 5th April 2023).
VAT registration
The VAT registration threshold of £85,000 and the deregistration threshold of £83,000, will remain frozen until at least 1st April 2026.
Energy costs
Windfall Tax
The energy profits levy (EPL), also commonly referred to as the oil and gas windfall tax, will increase to 35% from 1 January 2023 and will apply until 31 March 2028
Business rate will be based on updated property valuations from 1 April 2023. Targeted support will be offered to support businesses through the transition.
The business rates multipliers will also be frozen in 2023–24.
A number of reliefs are being introduced or extended.
Local authorities in England are being given additional flexibility in setting council tax rates.
Employers
National Living Wage (NLW)
The government will increase the NLW for individuals aged 23 and over to £10.42 an hour from 1 April 2023.
National Minimum Wage (NMW)
The NMW will increase to £10.18 an hour (for 21-22 year olds), £7.49 an hour (for 18-20 year olds) and £5.28 an hour (for both 16-17 year olds and apprentices).
Car, van and fuel benefit charges
From 6 April 2023 car and van benefit charges will rise in line with the Consumer Price Index (CPI). The same will apply to car and van fuel benefit charges.
Company Car Tax
The incentives for the provision of electric and ultra-low emissions cars will remain at the set rates until at least the 5th April 2028.
From 6th April 2025 onwards the percentages for electric and ultra-low emission cars with CO2 emissions less than 75g/km will increase by 1% per year until at least 5th April 2028.
A maximum appropriate percentage of 5% will apply for electric cars and 21% for ultra-low emission cars.
Vehicle Excise Duty on electric vehicles
From the 1st April 2025, Vehicle Excise Duty (VED) will apply to electric cars, vans and motorcycles under legislation that is to be introduced in Autumn Finance Bill 2022.
Zero-emission cars first registered between 1 April 2017 and 31 March 2025 will be liable at the standard rate, which is currently £165 a year.
New zero-emission cars registered after 31 March 2025 will be liable at the lowest first-year rate, which currently applies to vehicles with CO2 emissions from 1g/km to 50g/km at the rate of £10 a year.
From the second year of registration onwards, the standard rate will apply.
State pension,
The state pension will increase by inflation from April 2023, in line with the government’s commitment to the triple lock.
The full basic state pension will increase from £141.85 to £156.20 per week, and the new state pension will increase from £185.15 to £203.85 per week.
Railways Transformative Growth Plans
The government re-committed to ‘transformative growth plans’ for the railways including the East West Rail, core Northern Powerhouse Rail, and High Speed 2 to Manchester.
Stamp Duty Land Tax(SDLT)
The stamp duty nil rate threshold for residential property purchases in England and Northern Ireland would increase from £125,000 to £250,000 with effect from 23 September 2022.
Where all buyers in the transaction are first-time buyers and the purchase price is £625,000 or less, the nil rate threshold is £425,000 from the same date.
Online sales tax
Following consultation, the government has decided not to implement the Online Sales Tax (OST) as planned.
Click below to listen to LCCI's Chief Executive @RichardDABurge speak to @EddieNestorMBE about the Autumn statement and to read LCCI's full reaction ⬇️
— London Chamber of Commerce and Industry (@londonchamber) November 17, 2022
