Autumn Statement - 17 November 2022

On Thursday 17th November, the Chancellor announced the government’s third fiscal statement in as many months.  It was widely trailed in the media that his speech was likely to see a return to spending cuts and tax rises in an attempt to undo some of the damage caused by his predecessor’s mini-budget back in late September.  Against a backdrop of rising inflation and economic recession, the Chancellor laid out three core priorities of stability, growth and public services as the guiding principles of the decisions taken.   

As in previous years we have put together a comprehensive summary of the key changes affecting taxpayers and businesses for the new financial year and you can download your copy here

Some principal announcements were as follows:

Individuals

• Tax free personal allowance to be frozen at £12,570 until 2028*
• No changes to the basic, higher and additional rates of income tax for 2023/24 - these remain at 20%, 40% & 45% (*see note re Scottish tax rates below)
• Dividend allowance decreasing to £1,000 from April 2023 and to £500 from April 2024
• Additional rate of income tax to kick in at £125,140 from April 2023*
• National Insurance and Inheritance Tax thresholds frozen until 2028
• CGT annual exemption reducing to £6,000 from April 2023 and again to £3,000 from April 2024
• National Living Wage increasing to £10.42 from 1 April 2023 for those aged over 23
• State pensions and other benefits uprated by 10.1% from April 2023

* The above income tax announcements relate only to savings/dividend income in Scotland as the Scottish Government sets income tax rates and thresholds for Scottish taxpayers in relation to earned income. The Scottish Budget for 2022/23 scheduled to be announced on 15th December 2022.

 Businesses

• Main corporation tax rate introduced at 25% from April 2023 on profits above £250k as previously announced, small company rate of 19% continues to apply on profits up to £50k
• R&D Tax Relief being reformed:
• SME scheme will now only see an 86% enhanced deduction for R&D expenditure with a 10% payable credit
• Large company RDEC scheme will now see an increase to a 20% payable credit
• Government to consult on design of a simplified single RDEC style scheme for all businesses
• Annual Investment allowance set at £1m per annum on a permanent basis
• VAT Registration threshold frozen at 85,000 for a further two years until March 2026
• Energy Price Guarantee to be maintained through the winter limiting typical energy bills to £2,500, rising to £3,000 from April 2023.

In reality, there was little in the way of major tax changes that had not already been announced or hinted at in the run up to the Autumn Statement.  Many of the existing tax thresholds have been frozen for a number of years ahead, effectively a hidden tax increase given the current rate of inflation.  In particular, the VAT registration threshold being frozen at £85,000 until 2026 will see many more businesses obliged to register for VAT over the coming years.