Autumn Statement 2022: What it means for you?

By

Chris Andreou

Contents

Autumn Statement 2022: What it means for you?Autumn Statement 2022: What it means for you?

On the 17th of November 2022,  the Chancellor, Jeremy Hunt, outlined the changes in the Autumn Statement. He stated that the government plans to tackle the cost of living crisis and rebuild the UK economy. The priorities for this plan are stability, growth and public services. He states the government is “honest about the challenges” and “fair about our solutions”. 

This article provides a summary of events outlined by the statement for both individuals and businesses. The earliest changes will come into effect from April 2023.

Income tax, National Insurance and Inheritance tax

The threshold on the additional rate income tax (45%) is to be lowered in April 2023, meaning the top earners will pay the additional rate of tax on earnings over £125,140 (currently £150,000).

A further two years of a freeze on income tax, personal allowances, higher rate thresholds, NI thresholds and inheritance tax thresholds are scheduled to occur until April 2028; previously being set to be reviewed in April 2026.

National Living Wage

From April 2023, the National Living Wage will increase from £9.50 to £10.42 for those ages 23 and over.

Dividend Tax

A reduction in Dividend tax-free allowances is expected next year and in 2024. The tax-free dividend allowance will be reduced from £2,000 to £1,000 in April 2023 and then to £500 in 2024.

Capital Gains Tax

The annual tax-free allowance for capital gains tax will reduce from £12,300 to £6,000 in April 2023 and reduce to £3,000 in April 2024.

Company Cars (Benefit kind)

Company car tax will increase by one percentage point yearly for the next three years from 2025-28.

Employers National Insurance 

The government plans to maintain the threshold for Employers' National Insurance Contributions at the current level from April 2023 until April 2028. 

Employers Allowance

Employer allowance is to be retained at a higher level of £5,000.

VAT

Jeremy Hunt announced that VAT registration and deregistration thresholds will be maintained at £85,000 for the next two years from the 1st of April 2024.

Corporation Tax

The planned increase in Corporation Tax to 25% will still go ahead. The £1 million allowance for annual investment will remain.

Investment Allowance

The government plans to set an Annual Investment Allowance at a permanent £1 million from 1st April 2024.

IR35

IR35 2017 and 2018 reforms are to be maintained.

Energy Bills

The government plans to adjust a typical household's price from £2,500 to £3,000 per year from April 2023 to March 2024.

Windfall tax

Windfall tax on the profits of oil and gas companies will increase and be extended until March 2028, beginning on the 1st of January. The tax increase is expected to be up 10% from 25% to 35%.

Electricity Generator Levy

The government is introducing a new temporary 45% tax levied on “extraordinary returns” from electricity companies. This will be implemented from the 1st of January 2023 until March 2028.

Growth

The Office for Budget Responsibility (OBR) forecasts that this year's growth is expected to be 4.2%, but the economy will shrink by 1.4% in 2023.

Inflation

The OBR has predicted that inflation will be 9.1% this year and 7.4% in 2023. 

Universal Credit

Means-tested benefits such as universal credit are expected to rise in line with inflation (10.1%).

State Pensions

State pensions are also expected to rise by the same amount.

Debt and spending targets

Jeremey Hunt proposes that government spending will continue to increase every year for the next five years but at a slower rate at 1% a year in real terms.

Defence spending

Jeremy Hunt reconfirms the government's commitment to maintaining defence spending at 2% of GDP for the time being. 

Overseas Aid

Spending on overseas aid will be kept at 0.5% for the next five years, below the 0.7% target.

NHS Spending

The Chancellor stated that the NHS would see a £3.3bn increase in each of the next two years.

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