Jeremy Hunt may be the fourth Chancellor in a year but in delivering his Autumn Statement he seized every opportunity to remind us of his previous roles in Government and indeed his earlier lives as an apprentice and entrepreneur as evidence that he was the right man with the right depth of experience and knowledge to deliver a Statement that focused on stability, growth and public service.
With confidence and market reaction probably as important as the detail, the key objective was to deliver a Statement which showed the world that the Government had a plan to deal with global headwinds against a backdrop of inflation at 11.1%, rising interest rates, recessionary pressures and a large hole in the public finances.
Key points
- From April 2023 the rate at which people pay the additional rate of Income Tax, charged at 45%, will change from £150k to those earning over £125,140. Click here for more information.
- The tax-free allowances for capital gains and dividends will be reduced in 2023-24, and in 2024-25 to each be approximately a quarter of the current levels.
- R&D Relief for SMEs will be reduced with the enhancement reduced to 86% and the repayable credit reduced to 10%, whilst the large company scheme will be made more generous with the rate increasing from 13% to 20%. Click here for more information.
- From 2025, road tax will be introduced for electric vehicles. and BIKs will increase by 1% per year.
Brief recap – key changes previously announced:
- Personal tax thresholds, CGT, IHT, etc. limits all frozen.
- Corporation Tax to rise from 19% to 25% from 1 April 2023 for profits over £250k.
- The Annual Investment Allowance is set permanently at £1m.
Autumn Statement 2022 new key measures announced:
Tax
- From April 2023 the rate at which people pay the additional rate of income tax, charged at 45%, will change from £150k to those earning over £125,140.
- Tax-free allowance for capital gains will reduce in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25.
- The tax-free dividend allowance will be reduced to £1,000 in 2023-24, and then to £500 in 2024-25.
- Personal tax thresholds, NIC thresholds, and IHT bands will be maintained at current levels for a further two years until April 2028, to strengthen public finances.
- Stamp Duty Land Tax cuts announced in the Growth Plan will now be time-limited, ending on 31 March 2025.
- R&D Relief for SMEs will be reduced to tackle perceived avoidance with the enhancement reduced to 86% and the repayable credit reduced to 10%.
- The RDEC scheme will however be made more generous with the rate increasing from 13% to 20%.
- The Government will protect 20bn in Research & Development investment in 2024-25, as well as reforming Tax Credits and changes in EU regulations to be announced next year to boost innovation
- The Energy Profits Levy is being increased and will be extended. There will also be a temporary tax on proceeds from electricity generators.
- Business rates revaluation will happen next year, but there will be a new £13.6bn package of business rates support.
- The NIC Employment Allowance will stay at the increased level of £5,000.
- The National Living Wage will see its largest ever cash increase, and all National Minimum Wage rates will also receive a boost from April 2023.
Spending
- Government spending will continue to increase in real terms every year for the next five years but at a slower rate.
- Defence spending will continue at 2% of GDP until there is a review next year.
- £280m will be invested to help the DWP to crack down on benefit fraud and errors in the next two years.
- A review of the UK’s skills and training programme will be undertaken
- The budget for schools will be increasing by £2.3bn next year and £2.3bn the year after – taking the core schools budget to a total of £58.8bn.
- Up to £2.8bn in 23-24 and £4.7bn in 24-25 for Adult Social Care.
- A nuclear powerplant at Sizewell C will go ahead.
- The pensions triple lock is protected – next year pensions will increase with inflation.
- A new energy efficiency taskforce aims to save people, businesses and the public sector money on energy bills, and will be backed by £6bn in new funding.
- Energy price guarantee to be extended beyond April 2023 but will be less generous with a typical household paying an additional £500.
- To support vulnerable households following changes to the Energy Price Guarantee, further Cost of Living Payments will be made next year. The Government will also provide a further £1bn to enable an extension to the Household Support Fund over 2023-24.
- Round 2 of the Levelling Up Fund will invest at least £1.7bn in local projects across the UK.
- The building of new infrastructure such as roads, train lines and communities will be safeguarded by over £600bn in capital investment over the next five years.
- Investment Zones announced in the mini budget will be refocused to universities in high potential areas.
- New powers to tackle monopolies.
- Import tariffs on some imported goods to be scrapped.
- Post-Brexit reforms of Solvency II will unlock tens of billions of pounds in investment by UK insurance companies.
- The Government will cap rent increases in the social rented sector under inflation next year, at 7%.
- Working age benefits will rise by the rate of inflation at 10.1% and the household benefit cap to be increased from April 2023.
- To help people with rising interest rates, homeowners on Universal Credit will be able to apply for Support for Mortgage Interest loans after three months instead of nine months, including those in employment.
