Autumn Statement

Just 55 days from the shambles that was The Growth Plan, current Chancellor Jeremy Hunt took to the dispatch box yesterday (17th November 2022) and delivered his Autumn Statement.  Behind him was the new Prime Minister, a man who just over 135 days previously had stood down from the same role.  With just two items remaining from the intervening Chancellors statement, it was necessary to stabilise things following the carnage that ensued since the end of September.

This time the approach was different, with acknowledgement of a big fiscal deficit to close and full oversight from the Office of Budget Responsibility (OBR) the reckless apparent generosity of the last outing was not going to happen again.

Here are the key points:

• Tax Thresholds Freeze is extended and will continue to April 2028 this includes

  • Personal Allowance

  • Main National Insurance thresholds

  • Inheritance Tax

• Basic rate tax (20%) remains starting at £12,571 and High Rate Tax (40%) at £50,271

• Additional Rate Tax (45%) will now start at £125,140 from 6th April 2023 (reduced from £150,000) and will apply to savings and dividend income too – the personal allowance will still be clawed back for earnings in excess of £100,000

• Inheritance Tax nil rate band remains at £325,000 and residential nil rate band at £175,000.  Accompanying inheritance planning rules are unchanged.

• The ISA allowance will remain at £20,000

• Dividend Allowance will reduce from £2,000 to £1,000 from 6th April 2023 and to £500 from 6th April 2024

• Capital Gains Tax Allowance will reduce from £12,300 to £6,000 from 6th April 2023 and £3,000 from 6th April 2024

• The reversal of the National Insurance Levy and Stamp Duty measures introduced in September’s Growth Plan are the sole survivors of this outing.

• The ‘Triple Lock’ on State Pensions will remain and the new state pension will rise to £203.85 per week from April 2023 making the annual amount £10,600.20

• Following many generous tax breaks for Electric Vehicles over the last few years, the first chink in the armour of these incentives sees Vehicle Excise Duty levied on zero emission cars, vans, and motorcycles from April 2025.  Company Car Tax rates will continue, encouraging ongoing take up of electric vehicles until April 2028

• The statement reaffirmed the Corporation Tax rise to 25% and keeping the Small Profit rate at 19%

The OBR admits that we are now in recession, but the budget measures should ensure that this will be shallower than it could be.  Inflation is expected to fall from the middle of 2023 perhaps taking pressure off the Bank of England to keep raising interest rates.

What is clear is that ‘stealth tax’ will impact everyone.

The generous state pension increase alone lifts utilisation of the static personal allowance from 76.6% to 84.3%.  This means a greater potential personal tax liability for pensioners from their other pensions in payment.

The improved deposit interest rates for cash in banks and building societies now bring even relatively modest amounts of savings into the tax regime, including nil or basic rate taxpayers.

Despite speculation there were notable absences, with pension funding and its associated tax relief, the lifetime and annual allowances failing to get mentioned.  The strategies presented by pension funding personally or from a business are never more important.

Thankfully, to enable us to fully digest the impact of everything duties on beer, wine and spirits at least remained as they are!

From the delivery of today’s Autumn Statement to the end of the current tax year leaves just 139 days before some of the new rates and thresholds commence so early action and planning is strongly advised.

For more information on how Prosperis can help, please contact us on 01423 223640 or advice@prosperis.co.uk

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow. All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.