2022 Autumn Budget Highlights

November 2022: The Autumn Budget

Jeremy Hunt delivered his first statement as Chancellor of the Exchequer at a time of great challenge for the UK and global economies with the backdrop of sky-high inflation, recessionary warnings, high interest rates and the ongoing war in Ukraine. In his first few days in office, he had already reversed most of the measures announced in his predecessor’s September Mini Budget. He has now set out a series of tax rises and allowance freezes & cuts to help combat the ‘black hole’ of public spending set out in the September mini-budget.

• Income Tax – The 45% Additional Rate of Income Tax threshold is being reduced from £150,000 to £125,140 in April 2023 as higher earners are expected to pay an additional £1,243 in tax from the change. All other rates and allowances will remain the same.
• Tax-Free Allowances – The Personal Allowance, Higher Rate of Income tax threshold, National Insurance and Inheritance Tax thresholds are being frozen at their current levels until 2028.
• Dividend Allowance – From April 2023, the tax-free Dividend Allowance will be reduced from £2,000 to £1,000, followed by a further reduction from £1,000 to £500 from April 2024. The dividend tax rates for basic rate, higher rate and additional rate taxpayers will remain at 8.75%, 33.75% and 39.35% for both the current tax year and 2023/24. The 1.25% increase installed from the start of 2022/23 will not be reversed.
• Pensions & Triple Lock – The government has committed to raising benefits, including working age benefits and the State Pension, by 10.1% (CPI based increase) from April 2023 to ensure that they remain in line with inflation. There were no changes announced to pension tax relief. Wage inflation may also mean that a pension contribution is a more attractive option for those who may otherwise lose out on child benefit or personal allowance. There has been an ongoing review of State Pension age and whether the current timetable for changes is still appropriate. The Government will publish their response in early 2023.
• National Insurance – The increase to NI to help pay for social care reforms has been scrapped. The additional 1.25% which was added to the rates of NI for 2022/23 for employees, employers and the self-employed has been removed from November 2022. NI thresholds will be fixed at the current 2022/23 levels. The changes to the thresholds at which individuals start to pay NI, which were introduced in July 2022, will remain – i.e. they’re kept in line with the annual personal allowance of £12,570.
• Capital Gains Allowance – Also from April 2023, the Capital Gains Tax (CGT) Allowance will be reduced from £12,300 to £6,000, followed by a further reduction from £6,000 to £3,000 from April 2024. There was no change to the rates of CGT and these will continue to be 10% and 20% (18% and 28% respectively for gains on residential property).
• Inheritance Tax – The freeze on both the nil rate band (NRB) and residence nil rate band (RNRB) has been extended for an additional two years. The NRB will remain at £325,000 and the RNRB at £175,000 until April 2028.
• Stamp Duty – The tax-free threshold at which home buyers pay Stamp Duty is doubling from £125,000 to £250,000 before rising to 5% between £250,000 and £925,000. The first-time buyer tax-free threshold also rises from £300,000 to £425,000 and they can now claim that threshold on property values up to £625,000. This is set to remain in place until 2025.
• Corporation Tax – Corporation tax will rise to 25% from April 2023 as originally planned. However, small companies with profits below £50,000 will continue to pay at the current rate of 19%. There will also be a reintroduction of tapering relief for businesses with profits between £50,000 and £250,000 so that they pay less than the main rate.
• Electric Vehicles – As electric vehicles are forecast to be 50% of all vehicles sold by 2025, the government is set to remove the vehicle excise duty exemption from April 2025.
• Energy Profits Levy – From 1^st January 2023 till March 2028, the energy profits levy will be increased from 25% to 35%. Electricity generators will also subject to a temporary 45% levy for the duration.
• Energy Price Guarantee – The energy cap is set to rise from £2,500 to £3,000 for a typical household, providing an average saving of £500.

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DISCLAIMER:

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES, OF AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.

“The information contained in this article is intended solely for information purposes only and does not constitute advice.  While every attempt has been made to ensure that the information contained on this article has been obtained from reliable sources, Vizion Wealth is not responsible for any errors or omissions. In no event will Vizion Wealth be liable to the reader or anyone else for any decision made or action taken in reliance on the information provided in this article”.