Autumn Statement 2022

The Autumn Statement was delivered in the context of weak economic growth, high inflation, and rising interest rates. 

 

Economic output (measured by GDP) will not return to its pre-pandemic level until Q4 2024, according to the Office for Budget Responsibility (OBR)’s forecast. 

 

 

The income tax additional rate threshold will reduce from £150,000 to £125,140 from April 2023. Reducing these thresholds will cost £1,243 for an additional rate taxpayer. 

 

Personal tax thresholds – personal allowance, basic and higher rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270. 

 

Basic rate of income tax will be maintained at 20%. This was previously announced to be reduced to 19%, which will not go ahead from 2023. 

 

 

 

0% starting rate for savings onlyuUp to £5,000 

20% basic rate tax £12,571 - £50,270 

40% higher rate tax £50,271- £150,000 

45% additional rate tax - above £150,000 

 

 

0% starting rate for savings only Up to £5,000 

20% basic rate tax £12,571- £50,270 

40% higher rate tax £50,271- £125,140 

45% additional rate tax Above £125,140 

 

 

The national insurance thresholds for all classes will be maintained until April 2028 at the current level. 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. 

 

The employment allowance is set to the current level of £5,000. 

 

The temporary 1.25% increase from 6 April 2022 in national insurance rates has been abandoned from 6 November 2022. The Health and Social Care Levy is no longer going ahead. The introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled too. 

 

 

Employment allowance (per year/employer)- £5,000 

 

 

For rate between primary threshold (increased from £9,880 to £12,570 from Jul-22) and upper earnings limit of £50,270. 

 

- From 6 April 2022 to 5 November 2022 – 13.25% 

- From 6 November 2022 to 5 April 2023 - 12% 

 

For the whole of the 2022 to 2023 tax year a director’s Primary Threshold is £11,908 

For rate above upper earnings limit 

 

- From 6 April 2022 to 5 November 2022 – 3.25% 

- From 6 November 2022 to 5 April 2023 2% 

 

 

- 12.73% as the main primary percentage blended rate, and 

- 2.73% as the additional primary percentage blended rate. 

 

Employer's secondary class 1 rate above secondary threshold 

 

The Secondary limits for employer’s NIC will be frozen at £9,100 until April 2028 

 

- From 6 April 2022 to 5 November 2022 - 15.05% 

- From 6 November 2022 to 5 April 2023 - 13.8% 

 

Annual Blended Rates for Directors and Class 1A – 14.53% 

 

Class 2 rate (per week where profits are above lower profits limit threshold - £3.15 

Class 2 small profits threshold (per year) - £6,725 

Class 3 voluntary rate (per week) - £15.85 

Class 4 lower profits limit - £11,908 

Class 4 upper profits limit - £50,270 

Class 4 rate between lower profits limit and upper profits limit - 9.73% 

Class 4 rate above upper profits limit - 2.73% 

 

 

Employment allowance (per year/employer) - £5,000 

Employee’s primary class 1 rate between primary threshold and upper earnings limit - 12% 

Employee’s primary class 1 rate above upper earnings limit- 2% 

Employer's secondary class 1 rate above secondary threshold - 13.80% 

Class 2 rate (per week where profits are above lower profits limit threshold - £3.45 

Class 2 small profits threshold (per year) - £6,725 

Class 3 voluntary rate (per week) - £17.45 

Class 4 lower profits limit - £12,570 

Class 4 upper profits limit- £50,270 

Class 4 rate between lower profits limit and upper profits limit - 9.73% 

Class 4 rate above upper profits limit - 2.73% 

Class 1A and 1B NIC on staff benefits - 13.8% 

 

1.25% Health and Social Care Levy (Repeal) will be removed from departmental budgets from 2023-24 onwards. 

 

 

From 1 April 2023, the government will increase the National Living Wage (NLW) by 9.7% to £10.42 an hour, for those aged 23 and over. From 1 April 2023 rates will increase as follows: 

 

• the rate for 23 year olds and over to £10.42 an hour 

• the rate for 21-22 year olds to £10.18 an hour 

• the rate for 18-20 year olds to £7.49 an hour 

• the rate for 16-17 year olds to £5.28 an hour and 

• the apprentice rate to £5.28 an hour. 

 

 

Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018. 

 

Dividends above the dividend allowance were taxed at 7.5% (basic rate), 32.5% (higher rate), and 38.1% (additional rate). From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate) 

 

 

Inheritance tax nil-rate band and residence nil-rate band – thresholds are maintained at the current level until April 2028. 

 

The inheritance tax nil rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, while the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2m. 

Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1m without an inheritance tax liability. 

 

 

The annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023 then £3,000 from April 2024. 

 

 

Stamp Duty Land Tax (SDLT) cuts for England and Northern Ireland will remain in place until 31 March 2025. On 23 September 2022, the government increased the nil-rate threshold of SDLT from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000. 

 

The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction which will remain in place only until 31 March 2025. 

 

 

From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%. 

Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. 

 

 

Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1 April 2023. 

 

 

For expenditure incurred on or after 1 April 2023, Research and Development (R&D) tax reliefs will be changed as follows: 

 

• the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86% 

• the SME credit rate will decrease from 14.5% to 10% and 

• R&D expenditure credit rises from 13% to 20%. 

 

 

 

The chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025. 

 

Company car taxes are under review and are going to be set up until April 2028 to provide long term certainty for taxpayers and industry in Autumn Finance Bill 2022. Rates will continue to incentivise the take up of electric vehicles: 

 

• appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars 

• rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28. 

 

 

The VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024. 

 

 

The government has clearly stated that it has decided not to introduce an OST, an idea put forward by certain stakeholders in the context of business rates reform. The government’s decision reflects concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models. 

 

This does bring a degree of certainty in future planning for many online retailers and – along with the rates reforms announced – clarity for those with fixed retail premises. 

 

 

As previously announced, the business secretary has widened eligibility of the start-up loans scheme to businesses trading for up to three years as follows: 

 

• start-up loans of up to £25,000 are now available to start-ups that have been trading for up to three years, up from two years 

• new ‘second loans’ available for businesses that have been trading for up to five years 

 

These loans provide much-needed support for the UK’s innovators and entrepreneurs. Find out more here. 

 

 

You can potentially claim 100% of the costs of installing an electric vehicle charging point as a capital allowance. The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes. 

 

 

From April 2023, companies will be able to raise up to £250,000 of Seed Enterprise Investment Scheme (SEIS) investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from two to three years. To support these increases, the annual investor limit will be doubled to £200,000. 

 

 

The Chancellor highlighted that “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.” He highlighted he aims to tackle the cost-of-living crisis and rebuild our economy with his headline priorities of stability, growth, and public services. 

 

Overall, whilst an increase in taxes is rarely viewed as good news, the Chancellor has introduced key measures over the range of taxpayers and over time. 

 

For further information, call us on 0333 772 7753 or email [email protected]