The new Chancellor Jeremy Hunt delivered his Autumn Statement yesterday morning, addressing a £55 billion gap in the public finances. The Statement includes some significant tax increases, primarily through the freezing of tax thresholds and the reduction in some tax exemptions and allowances.
The personal tax announcement highlights include:
Income Tax:
The threshold for the additional (45%) rate will reduce from £150,000 to £125,140.
The Income Tax thresholds will be frozen for a further two years, until 2028.
Dividend Allowance to be cut from £2,000 to £1,000 in 2023-24 and to £500 from April 2024.
National Insurance
The Employment Allowance will be maintained at £5,000 until 2026.
Employer threshold frozen until 2028.
Capital Gains Tax
The Annual Exempt amount will be reduced from £12,300 to £6,000 for 2023-24 and to £3,000 from April 2024.
Inheritance Tax
The Nil Rate Band of £325,000 will be frozen for an additional two years to 2028.
Stamp Duty Land Tax (SDLT)
The SDLT cuts announced at the Mini-Budget will now be time limited, ending on 31 March 2025.
The business tax announcement highlights include:
Business Rates (England Only)
The rates will be updated to reflect changes in property values since the last reevaluation in 2017
Business Rates multipliers will be frozen in 2023-24 and support will be available
The relief for retail, hospitality and leisure sectors will be extended and increased, and there will be additional support provided for small business
Local Authorities in England will be compensated for the loss of income as a result of these business rates measure and will receive funding for administration and IT costs.
Research & Development tax credits
R&D tax relief for the SMEs deduction rate cut to 86% and the credit rate to 10% but increase the rate of the separate R&D expenditure credit from 13% to 20%.
National Living Wage Increase
The Government will increase the National Living Wage from £9.50 to £10.42 from 1st April for ages 23+
Minimum rate will increase from £9.18 to £10.18 for ages 21-22, from £6.83 to £7.49 for ages 18-20 and £4.81 to £5.28 for apprentices & under 18’s
Energy Profits Levy
Increase to 35% from January 2023 until 2028.
VAT
The VAT registration threshold will be held at £85,000 until March 2026.
Electric Vehicles
Will no longer be exempt from Vehicle Excise Duty, from April 2025.
Longer term certainty to taxpayers and businesses, the Government is setting rates for Company Car Tax until April 2028