Our third Chancellor of 2022 delivered his Autumn Statement this morning. With the majority of the announcements previously made in the September “mini budget” having now been reversed, the focus was very much on supporting individuals to weather the current economic climate and the promotion of economic growth.
We have set out below some of the key tax developments that we think are likely to affect you and/or your business. Please note that some of these changes were announced prior to this morning’s announcement.
National Insurance Contributions (NICs)
All NIC thresholds will remain frozen at their current levels until 2028.
The employment allowance for businesses will remain at £5,000, meaning 40% of businesses will not pay any employer’s NIC in respect of their employees.
VAT
The VAT registration threshold will be frozen at £85,000 until March 2026.
Income tax
The additional rate tax (45%) threshold will be cut from £150,000 to £125,140 from April 2023.
The tax-free personal allowance and higher rate tax (40%) threshold will be frozen at their current levels (£12,570 and £50,270 respectively) until 2028.
The tax-free dividend allowance will reduce from £2,000 to £1,000 from April 2023 and then reduce further to £500 from April 2024.
Capital Gains Tax
The tax-free annual exempt amount will reduce from £12,300 to £6,000 from April 2023 and then again to £3,000 from April 2024.
Other matters
The national living wage will increase to £10.42 per hour for those aged 23 and over from April 2023.
The previously announced stamp duty threshold reductions will remain in place until March 2025.
Electric cars will no longer be exempt from Vehicle Excise Duty (road tax) from 2025 and the benefit in kind rate on EVs will increase by 1% per annum from the same date. This will be capped at 5% for fully electric vehicles and 21% for ultra-low emission cars (hybrids).
A huge raft of changes to business rates were announced, with more detail to follow.
The R&D tax relief scheme has been reformed, with the SME scheme becoming less generous with the view to a move to a single simplified R&D tax relief scheme moving forwards.
If you would like to discuss any of these in further detail, or how they might impact you personally, please get in touch.