The new Chancellor of the Exchequer Jeremy Hunt delivered his Autumn Statement on 17 November 2022. Much of the speech focused on public spending and dealing with long-term challenges relating to energy, infrastructure and innovation. Cumulatively, however, the tax measures will have a significant impact on the nation’s finances, and some of the most significant measures are described below.
Personal tax
The threshold at which tax becomes payable at the highest “additional” rate in England, Wales and Northern Ireland will be cut from £150,000 to £125,140 from 6 April 2023. When the additional rate was first introduced in 2010/11, it affected fewer than 250,000 individuals, but more than one million taxpayers will soon be paying tax at this rate.
The income tax personal allowance was already due to be frozen at £12,570 until April 2026, and the Chancellor announced that it will remain frozen for a further two years until April 2028. Various other amounts were also announced as being frozen until April 2028, including the higher rate income tax threshold, various NIC thresholds, and the inheritance tax nil-rate bands. The freezing of the income tax and NICs thresholds will over time see many more people being brought either into the tax net or into paying tax at higher rates.
Individuals currently pay no tax on the first £2,000 of dividend income that they receive during a tax year. This allowance will be reduced to £1,000 from 6 April 2023 and then to £500 from 6 April 2024. Along similar lines, the annual exempt amount for capital gains tax will be reduced from the current £12,300 to £6,000 from 6 April 2023 and then to £3,000 from 6 April 2024.
In September 2022, the then Chancellor of the Exchequer increased the threshold above which SDLT first becomes payable on standard residential property transactions from £125,000 to £250,000. Jeremy Hunt has now announced that this measure would come to an end on 31 March 2025.
Corporate and business tax
No changes were announced to the rates of corporate tax previously announced, so from 1 April 2023 the main rate of corporation tax will be 25%. The capital allowances super-deduction will end on 31 March 2023 as always envisaged but, as previously announced, the annual investment allowance will be permanently set at £1 million from 1 April 2023, thereby providing 100% relief for annual qualifying expenditure on plant and machinery up to this limit.
The Chancellor announced significant changes to the rates of R&D tax relief. Under the “large company” scheme, the rate that is applied to qualifying expenditure to calculate the above-the-line tax credit will increase from 13% to 20% from 1 April 2023. The SME scheme, however, will become less generous with the rate that is applied to qualifying expenditure to calculate the “enhanced deduction” decreasing from 130% to 86%.
The Chancellor also announced that the appropriate percentages (used to determine the benefit-in-kind rate) for electric and ultra-low emission cars will increase by 1% per year for each of the three years from April 2025, the freezing of the VAT registration threshold at £85,000 until 31 March 2026, and an extension of energy-related windfall taxes.
