22nd November 2022
Following the Chancellor’s statement to the House of Commons in respect of the Autumn Statement for 2022, here is a summary of the announcements.
National Living Wage
From 1st April 2023, the Government will increase the National Living Wage (NLW) to £10.42 an hour, for those aged 23 and over.
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
The 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.
The basic rate of income tax will be maintained at 20%. This was previously announced to be reduced to 19%, which will not go ahead from 2023.
The employment allowance is set to the current level of £5,000.
The dividend allowance is to be reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018.
From 6th April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate).
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 providing a gradual increase in the effective Corporation Tax rate.
Annual Investment Allowances
The Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1st April 2023.
The VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1st April 2024.
Capital Gains Tax: reduction in the annual exempt amount
The annual exemption amount for Capital Gains Tax for individuals will reduce from £12,300 to £6,000 from April 2023, then £3,000 from April 2024.
Stamp Duty Land Tax (SDLT)
The Stamp Duty Land Tax (SDLT) cuts for England and Northern Ireland will remain in place until 31st March 2025. On 23rd September 2022, the Government increased the nil-rate threshold of 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 only until 31st March 2025.
The Chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
Company car taxes are under review and are going to be set up 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: –
- appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars.
- rates for all other vehicles bands will be increased by 1% for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.
Research & Development
For expenditure incurred on or after 1st April 2023, Research and Development (R&D) tax reliefs will be changed as follows: –
- 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% and
- R&D expenditure credit rises from 13% to 20%.
The inheritance tax nil-rate band and residence nil-rate band thresholds are maintained at the current level until April 2028.
The inheritance tax nil rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, while the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2m.
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 £1m without an inheritance tax liability.
The Chancellor confirmed that the planned revaluation for England will proceed in April 2023. At revaluation, property values used to calculate non-domestic rates are updated to reflect the property market (in this case to reflect values as at 1st April 2021). Current values have been in effect since April 2017 and are based on market values as at April 2015.
The Chancellor also confirmed that a transitional rates relief scheme, which phases in changes associated with new values, will be in place for 3 years following the revaluation.
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.