The Autumn Statement Breakdown
We’ve covered what will be changing with your taxes.
Personal Allowance Thresholds
In the face of a looming recession and the never-ending rising inflation, Chancellor Jeremy Hunt confirmed personal allowance thresholds will be frozen until April 2028.
These tax rises are aimed at those who pay the most tax and will apply to inheritance tax, VAT, capital gains tax, income tax and pension savings, in an attempt to keep those who are financially struggling the most from shouldering the biggest burden.
Windfall Tax
There will be an expansion to the windfall tax from 25% to 35% until 2028, which is targeting oil and gas companies. Alongside a new 45% windfall tax on the profits of electricity generators, it is expected to generate £14 billion next year.
Despite Truss’ earlier announcements declaring there will be no windfall taxes, it has now been put in place to counterbalance the unusually, and unreasonably high profits energy companies have made whilst much of the public are left struggling.
Capital Gains
In other tax-raising measures, the tax-free allowance for capital gains has been halved from £12,300 to £6000. This might increase the number of people who haven’t made a gain but who need to report, as limits in these situations are tied to multiple annual exemptions.
National Insurance Threshold
The national insurance threshold for employers will be frozen until April 2028 at a new higher level of £5,000, meaning 40% of all businesses will pay no NICs at all. Employers currently pay class 1 contributions of 15.05% on all earnings above the secondary threshold for almost all employees, which is currently £175.01 per week or £758.01 per month.
VAT Threshold
The VAT threshold will be maintained at £85,000 (for a 12-month period) until March 2026. It is already currently over twice as high as the EU or OECD averages.
However, there will be a crackdown on avoidance and evasion which is expected to raise an additional £2.8 billion by 2027-28.
Inheritance Tax
Inheritance tax nil rate bands, the tax threshold under which you pay no tax, will be frozen until 2027-28. As of 2022/23, this basic threshold was £325,000 and is usually 40% on anything above this amount.
Energy Support Package
From April 2023, the available energy support package has been revised. You can read more about what is available for businesses in our recent blog post here.
Dividend Allowances
The dividend allowance (the amount you can earn tax-free from company profits if you’re a shareholder) will be cut to £1,000. Previously the tax-free threshold was set at £2,000.
R&D Tax Credits
Research & development relief for SMEs has been cut from 130% to 86%, and the credit rate has been cut from 14.5% to 10%.
Electric Cars
Electric cars, vans and motorcycles will no longer be exempt from vehicle excise duty from April 2025, the tax levied on every vehicle using public roads in the UK. This is to ensure fair tax contributions as electric vehicles continue to increase in popularity.
Stamp Duty Land Tax
The reduction to SDLT will only remain in place until March 2025, despite previous claims it would be a permanent change as part of the Government’s Growth Plan and the Stamp Duty Land Tax (Reduction) Bill 2022-23.
National Living Wage
The national living wage for 23 year-olds and over will be increased by 92p to £10.42 an hour from April 2023.
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