Key Highlights from the Chancellor’s Autumn Statement 2022:
Personal taxes
Income tax
It was confirmed that the current personal allowance (£12,570) and the thresholds for the upper limit of the basic rate tax band (£50,270) and the amount at which the personal allowance starts to taper away (£100,000) will all remain unchanged until 5 April 2028.
One major change is that the threshold at which the 45% tax will start to apply is reduced from £150,000 to £125,140 with effect from 6 April 2023. The new limit of £125,140 is the amount of income at which the personal allowance falls to nil.
The tax free amount of dividends that can be received in any tax year will reduce from £2,000 to £1,000 on 6 April 2023 and then again to £500 on 6 April 2024.
National Insurance
The current thresholds in place will remain fixed until 5 April 2028.
Capital gains tax
The capital gains tax annual exemption will be reduced from £12,300 to £6,000 on 6 April 2023 and then again to £3,000 on 6 April 2024.
Inheritance tax
There were no announcements regarding inheritance tax other than to say that the current nil rate bands will remain in place until at least 31 March 2028.
Stamp Duty Land Tax
The current increase in the threshold at which Stamp Duty Land Tax becomes payable to £250,000 will be reversed on 31 March 2025 and the previous threshold of £125,000 will apply again after that date.
Business taxes
Corporation tax
It was confirmed that the planned increase in the main corporation tax rate from 19% to 25% with effect from 1 April 2023 will go ahead. This will apply to all companies with profits in excess of £250,000 (with the threshold reduced accordingly where there is a group of companies or more than one company under common control).
It was confirmed that the Annual Investment Allowance of £1 million is to be made permanent, and that the Superdeduction will end on 31 March 2023.
Changes will be made to the way that Research and Development tax credits are calculated that will make it more attractive for larger companies but less attractive for smaller companies. The credit for large companies will increase from 13% to 20%, but the small company additional deduction will fall from 130% to 86%, and the repayable tax credit rate will fall from 14.5% to 10%. There will also be a consultation on introducing a single scheme to cover all companies.
The Employment Allowance of £5,000 will remain in place which the government believe will mean up to 40% of employers will have no employers National Insurance liability at all.
VAT
The current rates will continue, and the threshold for VAT registration will remain at its current level of £85,000 until at least 31 March 2028.
Business rates
From 1 April 2023 the new valuations of business properties for rates purposes will come into effect. To minimise the impact of this on small businesses, the following steps were announced:
- The business rates multiplier will be frozen for another year
- There will be increased relief for retail, hospitality and leisure businesses worth over £2 billion
- Immediate full reduction of rates for businesses with lower bills following the revaluation
- A scheme worth £1.6 billion to cap the increase for businesses with higher bills following the revaluation
- Protection for small businesses losing Small Business or Rural Rate Relief through a Supporting Small Business scheme worth over £500 million
Other tax and duty changes
The Annual Tax on Enveloped Dwellings (ATED) will increase by 10.1% in April 2023.
Vehicle Excise Duty will be introduced on Electric Vehicles with effect from April 2025.
The Energy Profits Levy (windfall tax) on profits from the production of energy will increase from 25% to 35% and apply to profits made between 1 January 2023 and 31 March 2028.
A temporary tax of 45% on low-carbon electricity generators will also be introduced with effect from 1 January 2023 on all revenue made in a period where the average output price exceeds £75/MWh.
Company car tax rates will increase generally by 1% in 2025/26 and then remain the same in the following two years, subject to an upper limit of 37%. For electric cars and other ultra low emission cars the rates will increase by 1% in each year from 2025/26 t0 2027/28,
From April 2023, the car and van fuel benefits in kind multiplier will increase in line with CPI.
Other
The government is investing £79 million over the next five years in HMRC to allow additional staff to tackle more cases of serious fraud and address tax compliance risks among wealthy taxpayers.
It must be remembered that many of these announcements apply seek to apply tax rates, reliefs and allowances up until 31 March 2028, but there is a General Election due in 2025 at the latest, and it remains to be seen how many of these will survive a potential change of government.
If you have any questions about how the tax measures in the Chancellor’s Autumn Statement may impact your business and tax planning decisions, get in touch with your
local Moore Adviser. We have a team of expert tax and business advisors on hand to help you plan your arrangements early, allowing you to move forward with confidence and make informed tax decisions about your business.