Autumn Statement – What Has Changed?

Autumn Statement – What Has Changed?

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This emergency statement effectively replaces and re-writes the mini-budget.

Income tax

The income tax additional rate threshold will reduce from £150,000 to £125,140 from April 2023. Reducing these thresholds will cost £1,243 for an additional rate taxpayer.

Personal tax thresholds – ie personal allowance, basic and higher rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270.

Basic rate of income tax will be maintained at 20%.

National Insurance

The national insurance thresholds for all classes will be maintained until April 2028 at the current level. The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.

The employment allowance is set to the current level of £5,000.

Dividends

Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. 

From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate)

As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.

National Living Wage

From 1 April 2023, the government will increase the National Living Wage (NLW) by 9.7% to £10.42 an hour, for those aged 23 and over.

Corporation tax

From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead.

Small companies with profits up to £50,000 will continue to pay corporation tax at 19%.

Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief rate.

Annual Investment Allowance

Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1 April 2023.

VAT

A VAT-free shopping scheme for non-UK visitors to Great Britain will no longer be pursued.

Energy Price Guarantee

The VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.

Capital Gains Tax

The annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023 then £3,000 from April 2024.

Recovery Loan Scheme

The Recovery Loan Scheme, launched in April 2021 to help businesses recovering from the pandemic, has been extended to 2024.

Stamp Duty

Stamp duty reduction to last until 2025.

The stamp duty cuts announced in September’s mini-budget will remain in place until 31 March 2025, and will then be removed. 

Until this date, first-time buyers won’t need to pay stamp duty on the first £425,000 of the property they buy (up from £300,000); existing homeowners won’t have to pay on the first £250,000 (up from £125,000).

Energy Price Guarantee

The current Energy Price Guarantee provides support for household and business energy bills until 31 March 2023. Support for households will continue from April 2023 though support will be less generous and based on a higher average usage price cap of £3000 (up from £2,500) per annum, with additional targeted support for vulnerable households.

Further detail about eligibility for support for businesses can be found here

State Pension Triple Lock Reinstated

The Chancellor confirmed pensioners would receive a 10.1% increase, in line September’s inflation – a formula outlined in the state pension triple-lock guarantee. 

This was first introduced in 2010 by the Conservative-Liberal Democrat coalition government and means that payments are increased each year by whichever rate is the highest of either average earnings, the Consumer Prices Index (CPI) inflation, or 2.5%.

This means the state pension will be worth in excess of £10,000 for some people next year.

Council Tax Possible Increases

The Chancellor announced that he wanted to provide ‘greater flexibility’ to local authorities for setting council tax. Currently, local authorities can only raise council tax by up to 2.99% without the need to hold a local referendum. Next year, this is set to increase to 3%, with an additional 2% if they qualify for the social care precept. 

Tax on Electric Vehicles

As predicted, the Chancellor announced that vehicle excise duty will be rolled out to apply to electric vehicles for the first time, a move that will come into force from April 2025.