Highlights
- The main income tax allowances and thresholds, the main national insurance thresholds plus the inheritance tax nil rate bands will stay at their current levels for an extra two years to April 2028.
- The threshold for the 45% additional rate of income tax will reduce from £150,000 to £125,140 from April 2023.
- The dividend allowance will reduce from £2,000 to £1,000 from April 2023 and be halved again to £500 from April 2024. The capital gains tax annual exempt amount will be cut from £12,300 to £6,000 for 2023/24 and halved to £3,000 from April 2024.
- The government’s energy price guarantee will be adjusted from April 2023 so that the typical household will pay £3,000 a year.
- The state pension, pension credit, universal credit (UC), the benefit cap and certain other benefits will increase by 10.1% in line with CPI inflation to September 2022.
- Business rates bills in England will be updated from April 2023 to reflect April 2021 property values and there will be a £13.6 billion package of targeted support for businesses over the next five years.
- Research and development tax reliefs will be reformed with respect to expenditure incurred from 1 April 2023.
- The windfall profits of oil and gas companies will be subject to further tax increases and a new levy will apply to the ‘extraordinary returns’ of low-carbon electricity generators.
Introduction
The Chancellor Jeremy Hunt’s Autumn Statement came against the background of a Spring Statement and a September ‘mini-Budget’ (which has now been substantially reversed). The overall context is a European recession and high inflation in the wake of the pandemic and the war in Ukraine.
The Autumn Statement was presented as a difficult and necessary exercise to restore confidence in the UK’s financial position. In October, Mr Hunt spoke of “decisions of eye-watering difficulty” and ever since there has been a regular flow of rumours/leaks about which taxes may increase, how long existing tax allowance freezes could be extended and in which areas spending cuts would fall.
The steady supply of information felt like a pre-Budget kite-flying exercise, so that when the bad news arrived it was at least not a complete surprise. But that did not make the wide range of measures announced on 17 November any less painful.
Just under half of the £55 billion consolidation came from tax and the balance from spending. Mr Hunt described his strategy as a balanced plan for stability, following two broad principles: asking those with more to contribute more; and avoiding tax rises that most damage growth. Nevertheless, the tax increases announced are substantial, according to Mr Hunt, with tax as a percentage of GDP increasing by 1% over the next five years.
The Chancellor said he aimed to deliver a plan to tackle the cost of living crisis and rebuild the economy with stability, growth and public services as the priorities.
