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The Autumn Statement 2022



This year’s Autumn Statement was one of the most drastic of recent times so rradar’s tax expert, Steve Tetley, explores what this may mean for you from a tax perspective.


Income tax rates


The Chancellor, Jeremy Hunt, announced that the income tax and National Insurance thresholds, which were already frozen until 2026, will now be extended to 2028. Whilst the basic and higher rates of tax stay at 20% and 40% respectively, the freeze in tax thresholds will bring more people into higher rate tax as salaries will no doubt increase with inflation currently at such a high level.


The top rate of tax – 45% - currently applies to those earning £150,000 or more. From April 2023, this will reduce to those earning £125,140 or more, resulting in people who currently earn over £150,000 paying around £1,200 a year.


The change in rates and tax bands does not apply to Scotland; Scottish income tax rates will be confirmed in the Scottish budget, currently scheduled for 15th December 2022.


Dividend


The current tax-free dividend allowance of £2,000 will be reduced to £1,000 from 6th April 2023. A further reduction to £500 will be introduced from 6th April 2024.


Capital Gains Tax


At present, the first £12,300 of an individual’s capital gains is exempt. The exemption will reduce to £6,000 from 6th April 2023, and then to £3,000 from 6th April 2024.


Stamp Duty


In September, the stamp duty exemption for buying properties was increased from £125,000 to £250,000. For first time buyers, this increased from £300,000 to £425,000. The Chancellor announced yesterday that this measure will now be temporary and will only be in place until 31st March 2025.


Inheritance Tax


The current inheritance tax threshold is currently frozen at £325,000 until 2026 and this has now been extended to 2028.


National Minimum/Living Wage


The National Living Wage for those aged 23 and over will increase from £9.50 to £10.42 per hour, again from April 2023.


VAT


The VAT registration threshold will remain frozen at £85,000 until April 2026.


Companies


The following changes specifically affect companies:

  • Corporation tax rate increase to 25% for companies with profits over £250,00 from April 2023

  • Annual Investment Allowance confirmed at a permanent rate of £1m from April 2023

  • Research and Development Expenditure Credit (RDEC) will increase from 13% to 20% from 1st April 2023. The SME additional deduction will decrease from 130% to 86% and the SME credit rate will decrease from 14.5% to 10%, also from April 2023


Summary


Clearly there have been changes which will have a significant effect on individuals and businesses. To ensure these are managed effectively, contact Steve Tetley at rradar on 01482 296923 or via email at steve.tetley@rradar.com.