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Autumn Statement 2022 Digest

As Jeremy Hunt took to the dispatch box just 34 days after taking on the role of Chancellor of the Exchequer, all eyes were on him.


The backdrop for the Autumn statement was sobering. Inflation had hit 11.1% in the year to September – the highest level since October 1981.


In addition, Hunt confirmed that the UK is currently in a recession, according to the OBR, which will last “just over a year from the third quarter of 2022, to a peak-to-trough fall in GDP of 2%”. In 2023, GDP is expected to fall by 1.4%.


Rising prices will erode real wages and reduce living standards by 7% over the two financial years to 2023/24, wiping out the previous eight years’ growth, according to the OBR.


Meanwhile, unemployment will rise by 505,000 from 3.5% to a peak of 4.9% in the third quarter, according to the report.


Linked Accounting has outlined the main highlights of the autumn statement and what it means for you and your business, below.


Personal changes


A few changes for individuals had already been confirmed ahead of the Autumn Statement, either as part of Kwarteng’s mini-budget or its aftermath:


Basic-rate income tax remains at 20% “indefinitely”

National Insurance increase has been scrapped

Dividend tax rates will remain unchanged at 8.75%/33.75%/39.35%


Additional-rate income tax

One of the biggest announcements made by the Chancellor was the lowering of the additional-rate tax threshold from £150,000 a year to £125,140 as of 6 April 2023.


It’s predicted the change to the additional-rate threshold will mean 250,000 more taxpayers will now find themselves paying 45%.


This announcement is in stark contrast to Hunt’s predecessor’s plans to scrap the additional tax rate altogether.


Dividend allowance

The Chancellor announced that the dividend tax threshold will be slashed from £2,000 to £1,000 from April 2023 and then again to £500 the following year.


This will have a direct impact on many of our clients and will cost basic rate taxpayers more than £120 per year from April 2024 and almost £500 per year for higher rate taxpayers.


Income tax thresholds

The personal allowance threshold will remain frozen for a further two years, continuing until 2028, along with the higher-rate threshold and the National Insurance contributions (NICs) thresholds.


Some are referring to this as a ‘stealth tax’ – where wage increases over time will cause people to find themselves caught in higher tax bands, potentially negating pay rises.


National Insurance

In July 2022, NICs thresholds were increased to be brought in line with the income tax personal allowance, and fixed until April 2026. The Chancellor today announced that this freeze will be maintained for an additional two years, until April 2028.


Capital gains tax

In the statement, the Chancellor announced a cut to the capital gains tax (CGT) allowance, also known as the annual exempt amount, over the next two years.


The original allowance of £12,300 will be cut to £6,000 for the tax year 2023/24 and will then be halved again to £3,000 in 2024/25. This means a couple’s allowance will be reduced to £12,000 and £6,000 respectively.


The Government’s aim is to raise an extra £40m by 2027 by reducing the allowance rates for CGT.


Inheritance tax

The inheritance tax nil-rate is currently set at £325,000 until April 2026 and will remain at this rate for a further two years until April 2028.


The residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will still start at £2 million.


Qualifying estates will still be able to pass on up to £500,000, with the qualifying estate of a surviving spouse or civil partner remaining at £1m without inheritance tax liability.


Pension triple lock upheld

Ending weeks of speculation about whether or not the so-called ‘triple lock’ protection would be upheld, the Chancellor confirmed that pensions – like benefits – would rise in line with September’s inflation rate of 10.1%.


From April 2023, state pension payments will be:

● £203.85 per week (up from £185.15) for those who reached state pension age after April 2016

● £156.20 per week (up from £141.85) for those who reached state pension age before April 2016.


A review of the state pension age is currently being carried out, which considers whether the existing timetable remains appropriate. This will be published in early 2023.


Vehicle excise duty

Electric vehicles will no longer be exempt from vehicle excise duty from April 2025. Vehicle excise duty is a tax on all vehicles using public roads in the UK, and applies differently based on the vehicle’s CO2 emissions.


Stamp duty cuts remain until 2025

One of a few measures to remain initially unchanged from the mini-budget was the decision to raise the threshold at which stamp duty land tax is paid (in England and Northern Ireland) from £125,000 to £250,000. For first-time buyers, the threshold increased from £300,000 to £425,000.


Business changes


Changes for businesses were also confirmed following Kwarteng’s September mini-budget:


Corporation tax rises to 25% from 1 April 2023. The full 25% rate will only apply to profits of £250,000 and over, while companies with profits up to £50,000 will continue to pay at 19%. Profits between these two figures will be subject to a tapered rate.

IR35 reforms to stay. Planned changes to IR35 will no longer be repealed.

Alcohol duty freeze cancelled. The £600 million alcohol duty freeze that the Truss administration had planned on introducing on 1 February 2023 has been cancelled.

VAT-free shopping scheme cancelled. The shopping scheme, which was originally proposed to remove VAT for tourists on UK products, has been scrapped.


Employment allowance

The employment allowance will remain at its current level of £5,000, having increased to that amount in April 2022.


This offers eligible employers relief on their class 1 NICs.


Business rates

The Chancellor confirmed that a business rates revaluation will still take place in April 2023, but also announced a set of changes, including:


Multipliers will be frozen in 2023/24 at 49.9p and 51.2p (instead of rising to 52.9p and 54.2p).

Relief for retail, hospitality and leisure will increase from 50% to 75%, equating to £110,000 per business in 2023/24.

A transitional relief scheme will be put in place, placing ‘upward caps’ on bill increases caused by changes in rateable values at the 2023 revaluation. The caps will apply at different rates depending on business size.

● A new supporting small business scheme (SSBS) will take effect from 1 April 2023, capping bill increases at £600 per year for small businesses that are losing eligibility or seeing reductions in small business rate relief or rural rate relief.

Improvement relief, which was announced at Autumn Budget 2021, will now be introduced from April 2024 until 2028.


Annual investment allowance

One thing not mentioned directly in the Chancellor's speech, but included in the accompanying documents, is the decision to permanently set the annual investment allowance (AIA) at £1m for businesses.


R&D relief

Changes to the rates of the two research & development (R&D) relief schemes were announced.


The additional deduction for SME R&D relief will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. Meanwhile, the research and development expenditure credit (RDEC) rate will increase from 13% to 20%.


National living wage increase

From 1 April 2023, the national living wage will increase by 9.7%, to £10.42 an hour. This rate applies to people aged 23 and over and is said to equal an extra £150 per month.


Online sales tax

Following consultation, the Government has decided not to introduce a proposed online sales tax.


This tax would have aimed to rebalance the way online retail is taxed compared to in-store, but the Government said there were concerns it would be too complex and distort behaviour.


VAT threshold

The VAT registration and deregistration thresholds will remain at their current levels of £85,000 and £83,000 respectively until 1 April 2026.


Energy bills support

The current energy bill support scheme – the energy price guarantee – only runs until April 2023, with a price guarantee levied to help British taxpayers with their rising bills.


Hunt confirmed the change to the guarantee, continuing Government support, but increasing the threshold: with the average household now paying £3,000 a year, up £500 from the previous limit.


Hunt also announced the following energy initiatives:


● Households on means-tested benefits will get £900 support payments next year

● £300 payments will be made to pensioner households, and £150 for individuals on disability benefit.


The one-off payment of £400 for winter energy bills has been in effect for the last month, so this saw no change.


The energy bill relief scheme, which is aimed at supporting businesses (which aren’t covered by the energy price cap) also remained in place – as did the energy markets financing scheme.



If you would like to discuss how the changes outlined above will directly impact you or your business, please give us a call on 01403 907 884 or send us an email to info@linkedaccounting.co.uk.





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