In today’s Autumn Statement, Chancellor Jeremy Hunt sought to restore ‘sustainable public finances [by making] difficult but unavoidable decisions on tax and public spending’.
Building on last month’s reversals of tax-cutting announcements from September’s Mini Budget, Mr Hunt presented a number of tax measures that will take effect in 2023 and in subsequent years.
The key announcements for people included:
Income tax additional rate threshold
Currently, those earning £150,000 pay the 45% additional rate of tax. From April 2023, this threshold will be lowered to £125,140.
Personal tax thresholds
Income tax, inheritance tax and National Insurance thresholds will be maintained at current levels until April 2028.
Dividend allowance
The tax-free dividend allowance, currently £2,000, will decrease to £1,000 in 2023/24 and £500 in 2024/25.
Capital gains tax (CGT) allowance
The CGT Annual Exempt Amount, currently £12,300, will decrease to £6,000 in 2023/24 and £3,000 in 2024/25.
Electric vehicles: road tax
April 2025 will see the introduction of Vehicle Excise Duty for electric cars, vans and motorcycles.
Stamp duty land tax (SDLT)
Reductions to the thresholds from which SDLT must be paid will end on 31 March 2025. This means that from 1 April 2025:
- The nil-rate threshold of SDLT will revert from £250,000 to £125,000 for all purchasers of residential property in England and Northern Ireland
- The nil-rate threshold paid by first time buyers will revert from £425,000 to £300,000
- The maximum purchase price for which First Time Buyers’ Relief can be claimed will revert from £625,000 to £500,000
The key announcements for businesses included:
National Insurance Contributions (NICs)
The threshold for employers’ NICs will be fixed until April 2028.
Energy Profits Levy
From 1 January 2023, the Energy Profits Levy on oil and gas companies will increase from 25% to 35%. The levy will end on 31 March 2028.
Electricity Generator Levy
A new 45% levy will be introduced for extraordinary returns from low-carbon UK electricity generation arising from 1 January 2023. This temporary tax will be legislated for in the Spring Finance Bill 2023.
R&D tax reliefs
The Autumn Finance Bill 2022 will legislate for the following changes for expenditure on or after 1 April 2023:
- The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%
- The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
- The SME credit rate will decrease from 14.5% to 10%
Business rates
From 1 April 2023, business rate bills in England will be updated. Support will be provided through a multiplier freeze and a series of relief schemes, including extended and increased Retail, Hospitality and Leisure Relief.
As part of efforts to tackle tax avoidance, other announcements included:
- Legislation in Spring Finance Bill 2023 so that shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK
- A £79m investment over the next five years to enable HMRC ‘to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers’
To discuss any of the announcements, please get in touch with your usual BKL contact or use our enquiry form.
Our Autumn Statement information and analysis also includes:
- An article exploring the impact on SMEs
- An article on the Core Schools Budget Uplift
- A video from our tax specialists exploring what the changes will mean for people and businesses