What a grim and gloomy morning; not least because – as I listen to Jeremy Hunt deliver the Autumn Statement – the rain is pounding against my windows.
Jeremy is hopeful that their balanced plan will lead to a ‘shallower downturn’ with lower energy bills, higher long-term growth, and a stronger NHS and education system. The Office of Budget Responsibility (OBR) has confirmed that the UK is in recession; it is hoped that, as a result of today’s announcements, the rate of inflation will fall from next summer and the sun will start to shine again.
Those with more have been asked to contribute more but in fact, everyone will be contributing.
- The £12,570 personal allowance, the £50,270 higher rate tax threshold, the Inheritance Tax (IHT) nil rate band and the residence nil rate band together with National Insurance thresholds are to be frozen for two further years to April 2028. It is envisaged that just freezing the personal allowance will cost a taxpayer c.£600 annually but, with careful planning, qualifying Estates should still be able to pass the value of up to £1m to the next generation without paying Inheritance Tax.
- Additional Rate Taxpayers will be asked to contribute further income tax of c.£1,240 as a result of the £150k income limit being reduced to £125,140 from April 2023.
- The dividend allowance will be reduced to £1,000 from next April and to £500 from April 2024.
- The Capital Gains Tax (CGT) Allowance will be reduced to £6,000 from next April and to £3,000 from April 2024 but the differing CGT rates remain.
Corporation Tax will still rise to 25% from April 2023 on profits in excess of £250,000 although 100% tax relief on qualifying plant and machinery purchases of up to £1m will remain and is welcomed. The National Insurance Employment Allowance of £5,000 will stay which will relieve many small businesses from paying National Insurance. The VAT threshold will remain at £85,000 until April 2026 and there are plans to reduce the burden of business rates over the next five years.
From April 2025, owners of Electric cars, vans, and motorcycles will pay Vehicle Excise Duty but what about the potholes in the meantime? The Energy Profits Levy payable by oil and gas companies will increase from 25% to 35% from January 2023 and a new 45% will be levied on electricity generators.
The increases to the Stamp Duty Land Tax (SDLT) nil rate threshold to £250k for everyone (and to £425k / £625k for first-time buyers) that was announced in September 2022 will remain until 31 March 2025 to support the housing market.
Much welcomed news is the continuation of ‘The Energy Price Guarantee’ for a further 12 months to March 2024 – albeit increased from £2,500 to £3,000. Further targeted support will be provided for the most vulnerable in 2023/24 and those on benefits and pensioners will enjoy an inflationary increase – although the state pension age is under review.
The proposed cap to social care costs, announced by Boris, has been delayed.
Only time will tell if Jeremy’s balanced plan for stability, growth, and public services will deliver. As we approach the end of a volatile year; a year that saw 4 budgets – let’s hope 2023 brings much-needed stability.
For a full analysis of the Autumn Statement, read our report:
As always, if you would like to discuss how today’s announcements impact you and your business, please do not hesitate to call one of our friendly advisers on 01223 810100 at CKLG Accountants and Chartered Tax Advisors, Cambridge.
