Autumn Budget Statement 2022

Another week, another budget!

The Autumn Budget is (in theory) the main annual budgetary event, although the fiscal events (often called a ‘mini-budget’ by the press) have captured everyone’s attention just as much. Its aim is to restore stability to the economy, protect high-quality public services and build long-term prosperity for the UK.

Given there has not been a budget surplus in the UK since 2001 (£4 billion), and we had a massive deficit in covid times (£234 billion – ouch), it was inevitable that taxes would rise for all.

Here are the main measures taken affecting taxes in this statement:

• The income tax Personal Allowance and higher rate threshold, and the National Insurance contributions (NICs) upper earnings limit (UEL) and upper profits limit (UPL), which are already fixed at their current levels until April 2026, will be maintained for an additional two years until April 2028;
• The threshold at which higher earners start to pay the 45p income tax rate (the additional rate) will be reduced from £150,000 to £125,140 from 6 April 2023;
• The Married Couple’s Allowance and Blind Person’s Allowance will be uprated by the September CPI figure of 10.1% for the 2023-24 tax year. The Married Couple’s Allowance will be valued at between £4,010 and £10,375 and the Blind Person’s Allowance will be valued at £2,870;
• The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024;
• The government is setting rates for Company Car Tax until April 2028 to provide long-term certainty for taxpayers and industry in Autumn Finance Bill 2022. Rates will continue to incentivise the take up of electric vehicles;
• The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle chargepoints to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes;
• The inheritance tax nil-rate bands, which are already set at current levels until April 2026, will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an IHT;
• The capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 in 2023–24, and then to £3,000 in 2024–25;
• The threshold for employer NICs will be fixed until April 2028, but the Employment Allowance will continue to protect 40% of businesses from paying any NICS at all;
• Working age benefits will rise by 10.1%, and the Triple Lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation;
• The National Living Wage for those aged 23 and over will be increased by 9.7% to £10.42 an hour from 1 April 2023;
• As previously confirmed, the main rate of corporation tax will increase to 25% from April 2023;
• The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024;
• On 23 September 2022, the government increased the nil-rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000. The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction, which will remain in place until 31 March 2025;
• From April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles;
• The business rates multiplier will be frozen in 2023-24, while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year;
• Following consultation, the government will legislate to implement the globally agreed G20-OECD Inclusive Framework Pillar 2 framework in the UK; and
• From 1 January 2023 the Energy Profits Levy on oil and gas companies will increase from 25% to 35%, with the levy remaining in place until the end of March 2028, and a new, temporary 45% levy will be introduced for electricity generators.

Ratepayers in England will be able to see the future rateable value for their property and get an estimate of what their business rates bill may be from 1 April 2023 through the Find a Business Rates Valuation Service.

If you would like to discuss how any of the measures affect you personally, please feel free to contact us at: enquiries@tenforwardfinance.co.uk or call us on 020 8446 6112

Please note, data correct at time of writing and may not always be applicable to your circumstances. Please check with us before acting on any of the above as we cannot be held responsible for any action taken without giving formal advice.