Today’s Autumn statement announced the plans for the UK economy and how we bring down inflation, encourage growth and address the cost-of-living crisis.
The below will outline the key points and we will continue to update this as more information is available.
- The top rate of tax (45%) will be brought down from £150,000 to £125,140. Those earning £150,000 or more will pay just over £1,200 more a year.
- The income tax personal allowance threshold and tax bands will be frozen until 2028.
- Tax-free dividend allowances will be halved to £1000 from April 2023 and then to £500 in April 2024
- Capital gains thresholds will be cut from £12,300 to £6,000 next year and then to £3000 from April 2024.
- R&D Tax credits will be cut to 86%
- Employment allowance will be retained at a higher level of £5,000.
- VAT threshold of £85,000 will be maintained until March 2026
- Stamp duty cuts announced in the mini-budget will remain in place but only until 31st March 2025
- The Chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025 to make the motoring tax system “fairer”.
More information from the British Chamber of Commerce
Employment
- Work-coach ‘in work progression offer’ to help 600,000 Universal Credit claimants increase their hours or earnings. DWP SoS review of issues holding back workforce participation.
- Employer NICs fixed at £9,100 from April 2023 until April 2028.
National Living Wage (formerly named ‘National Minimum Wage’)
NLW to rise by 10.1%
- 23-year-olds and up by 9.7% to £10.42 an hour
- 21-22-year-olds by 10.9% to £10.18 an hour
- 18 – 20-year-olds by 9.7% to £7.49 an hour
- 16 – 17-year-olds by 9.7% to £5.28 an hour
- Apprentice rate by 9.7% to £5.28 an hour
- Accommodation offset rate by 4.6% to £9.10 an hour
Income Tax bands and rates (earned income)
- Reduce threshold of 45p rate from £150k to £125k. Those earning £150,000 or more will pay just over £1,200 more a year.
Income Tax personal allowance and other allowances
- Tax-free allowances (personal allowances) frozen until April 2028.
National Insurance
- 40% of all businesses will pay no NICs
- £2.8bn by 27/28 from cracking down on tax avoidance.
- The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.
- Employment allowance will be retained at a higher level of £5,000.
Pensions
- Review of State Pension Age to be published in early 2023.
Dividend Allowance
- Dividend Allowance will reduce from £2,000 to £1,000 from April 2023, and to £500 from April 2024.
Capital Gains Tax Annual Exempt Amount
- Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023, and to £3,000 from April 2024.
R&D Spending
- Public funding for R&D to be increased to £20bn by 2024/2025 to make the UK a science superpower.
Research and Development Expenditure Credit (RDEC)
- For Expenditure on or after 1st April 2023, the (RDEC) rate will increase from 13% to 20%.
- The SME additional deduction will decrease 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.
Solvency II
- Solvency II decision published to unlock tens of billions of points for growth-enhancing industries.
Business Rates
- Package of targeted support to help with business rates cost worth £13.6 billion over the next 5 years.
- The business rates multipliers will be frozen in 2023-24.
- The relief for retail, hospitality and leisure sectors will be extended and increased, and there will be additional support provided for small businesses.
- Upwards transitional relief (£1.6bn) will cap bill increases. ‘Upwards Caps’ will be 5%, 15% and 30% respectively for small, medium and large properties in 23/24.
Global Tax Reforms
- From 31st December 2023 the UK Government will introduce the OECD’s historic global tax reforms to make sure multinational corperations – including big tech companies – pay the right tax in the countries they operate, generating over £2.6bn a year.
Energy Windfall Tax
- Increase in energy profits levy from 25% to 35%.
- Electricity generation to be levied on electricity generators at 45%.
Vehicle Excise Duty
- Electric vehicles will no longer be exempt from vehicle excise duty (VED).
Import Tariffs
- UK Government will remove import tariffs on over 100 goods used by UK businesses in production processes for a 2-year period, through tariff suspensions – further details to be announced.
Sage has put together a fantastic post advising you on how to minimise the impact of energy price hikes on your business. Click here to read.
As always, we will continue to update you as we know more. This is what we know now until the Spring Budget is announced, expected in March 2023.