Autumn Statement 2022

The new chancellor, Jeremy Hunt, delivered his Government’s Autumn Statement on 17 November 2022, having previously reversed almost all the previously announced changes in his predecessors mini-budget statement.

The previously announced direct tax changes that are to remain in place are:

• Reversing the 1.25% increase in National Insurance from November.
• No Stamp Duty Land Tax on the first £250,000 of residential transfers.
• First time buyers to pay no Stamp Duty Land Tax on first £425,000 of residential transfers.

The key direct tax changes in the Autumn Statement were:

• The basic rate tax band will now remain at 20%.
• Corporation tax rate of 25% on profits over £250,000 from 1 April 2023, with a small profits rate of 19% for profits of up to £50,000.
• Personal allowance will now be frozen at £12,570 until 5 April 2028.
• Similarly, the basic rate tax band threshold is frozen at £37,700 until 5 April 2028 meaning higher rate tax is payable over £50,270.
• Dividend nil rate band is reduced from £2,000 in 2022/23 to £1,000 in 2023/24 and then £500 in 2024/25.
• Additional rate band threshold is reduced to £125,140 from 2023/24 onwards. This is not the case in Scotland, this is may be aligned in the Scottish budget with is due to take place on 15 December 2022.
• Capital gains tax annual exemption will be reduced from £12,300 to £6,000 for 2023/24 and then £3,000 from 2024/25.
• Inheritance tax nil rate band is frozen at £325,000, and the residential nil rate band is frozen at £175,000 until 5 April 2028.
• Secondary threshold for class 1 national insurance contributions (employer contributions) to be frozen at £9,100 until April 2028.
• Research and development tax relief to be reformed by rebalancing rates.
• Annual Investment allowance to be set at a permanent level of £1 million from 1 April 2023.
• From 17 November 2022 a new anti-avoidance provision is introduced whereby if an individual obtains non-UK securities in exchange for UK securities under the share for share exchange rules then the new holding will be deemed to have UK situs, ie they will be deemed to be UK holdings. This will stop non-domiciled individuals from being able to claim the remittance basis on the future disposal of such non-UK securities.

By freezing many rates and allowances for an extra 2 years to 2028, the Chancellor has essentially increased the tax take over the next 6 years as inflation and pay increases will result in an increased tax burden for most.

Further changes are expected to be announced in the 2023 budget, which is expected to be held in March 2023.