During the Autumn Statement the Chancellor highlighted that he understood that many people were feeling the impact of the cost of living crisis and action needed to be taken in order to rebuild our economy. His main areas of focus are stability, growth and public services.
We understand that listening to the statement made can be confusing and there’s an awful lot of information to take in, so we’ve put a summary together of the key points.
INDIVIDUAL
Rates and allowances
The changes announced for income tax currently only relate to England. Scotland and Wales will be making their own decisions on these rates in the coming days.
From April 2023 the income tax additional rate threshold will reduce from £150,000 to £125,140. The reduction in this threshold will mean that the additional rate taxpayer will be £1,243 worse off.
The government has confirmed that the basic rate of personal allowance £12,570 and the higher rate of £50,270 will remain the same until 2028.
Originally the Chancellor had announced that the basic rate of income tax would be reduced from 20% to 19% from 2023 but this will no longer be going ahead.
Other tax rates which have been affected
From 6 April 2023 Married Couple’s Allowance and Blind Person’s Allowance will be uplifted by 10.1%
National insurance
All National insurance thresholds will remain frozen until April 2028 at the current rates. From April 2023 until April 2028 the level at which employers start to pay Class 1 Secondary National Insurance Contributions for their employees will be fixed at £9,100.
As previously announced the temporary increase to national insurance rates for the Health and Social Care Levy levy has now been abandoned from 6 November 2022. The introduction of a separate Health and Social Care Levy tax in April 2023 has also been cancelled.
National Living Wage
As of 1 April 2023, there will be an increase to the National Living Wage (NLW) by 9.7% meaning for those aged 23 and over the new NLW will be £10.42 an hour,
Dividend allowance
Dividend allowance is reducing from £2,000 to £1,000 from April 2023 and further again to £500 from April 2024.
Dividends above the threshold are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate).
Inheritance tax
The nil-rate band for Inheritance tax and residence thresholds will be frozen at the current rate until April 2028. This means the threshold for the nil rate will continue to be £325,000 and the residence nil rate will remain at £175,000. 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.
Capital gains tax
The annual exemption amount for capital gains tax for individuals will reduce, from £12,300 to £6,000 from April 2023 then further again to £3,000 from April 2024.
Stamp Duty Land Tax (SDLT)
In September 2022 came the introduction of the new threshold for nil rated stamp duty, increasing the threshold from £125,000 to £250,000. For first time buyers this threshold is £425,000 which was increased from £300,000. These changes were put in place to get the property industry moving again.It has now been announced that these thresholds will remain at this amount until 31st March 2025.
First time buyers relief is now available up to a maximum of £625,000 (previously £500,000) the government have decided that this will only be a temporary measure until March 2025.
Car tax
The chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025
Help for energy costs
The current Energy Price Guarantee provides support for household and business energy bills until 31 March 2023. Support for households will continue from April 2023 though support will be less generous and based on a higher average usage price cap of £3,000 (up from £2,500) per annum, with additional targeted support for vulnerable households.
BUSINESS
Corporation tax
The planned increase for corporation tax will be going ahead from April 2023 and the new rate will be 25%. This will be applicable to companies with over £250,000 in profits. Smaller companies with profits less than £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
Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1 April 2023.
Research & Development
For expenditure incurred on or after 1 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%.
Car tax
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 percentage point 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 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.
VAT
The VAT registration and de-registration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.
National insurance
The employment allowance is set to the current level of £5,000 until April 2028.
Business Rates
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 1 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;
Access to finance – eligibility for start-up loans
As previously announced, the business secretary has widened eligibility of the start-up loans scheme to businesses trading for up to three years as follows:
start-up loans of up to £25,000 are now available to start-ups that have been trading for up to three years, up from two years
new ‘second loans’ available for businesses that have been trading for up to five years
These loans provide much-needed support for the UK’s innovators and entrepreneurs. Find out more here.
Recovery loan scheme
The Recovery Loan Scheme, launched in April 2021 to help businesses recovering from the pandemic, has been extended to 2024. Details of the scheme and eligibility criteria can be found on the British Business Bank website FAQs.
Government grants to install electric vehicle charge points
You can potentially claim 100% of the costs of installing an electric vehicle charging point as a capital allowance. The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
Details are correct at the date of publishing 30 November 2022
LEGAL NOTICE
This is a basic guide prepared for our clients. It should not be used as a definitive guide since individual circumstances may vary. Specific advice should be obtained, where necessary.
If you have any questions about how these changes will affect you please get in touch.
Comments