Autumn Statement 2022: What’s changed?

by | Nov 27, 2022

Chancellor of the Exchequer Jeremy Hunt set out several new measures to plug the £55 billion “black hole” in public spending in his Autumn Statement on 17 November.

Threshold freezes and spending cuts were on the agenda, as well as a number of regulations affecting businesses across the country.

Our article will explain the major changes that may impact you and your business.


Income tax thresholds

One of the most significant announcements in the Autumn Statement was the lowering of the additional rate tax threshold from £150,000 to £125,140, which will come into effect on 6 April 2023.

It’s predicted that this threshold decrease will mean a further 250,000 taxpayers will be paying 45% income tax on their salary as of next year. Lowering the additional rate tax band is a drastic change to Hunt’s predecessor’s plan to cut the band altogether.

The Chancellor also announced an extended freeze to the personal allowance threshold of £12,570 a year, which will continue until 2028. 

Combined with the increase in national living wage to £10.42 an hour, there are worries that the freeze will represent a “stealth tax” as more people could end up in a higher tax bracket.


Capital gains tax

The Chancellor also made changes to the capital gains tax (CGT) annual exempt amount, which the Government will slash twice over the next two years.

From next year, the Government will cut the annual allowance of £12,300 to £6,000 and halve it again to £3,000 for the 2024/25 tax year.

Combined with the £1,000 cut to dividend allowances, the measure is hoped to raise £1.2 billion a year from April 2025.


Effects on businesses

To help smaller businesses cope with the additional strains brought about by the tightening economy, the Chancellor announced the supporting small business scheme (SSBS), which will cap yearly bill increases at £600 for eligible businesses.

Furthermore, the Government will provide a £500m support package to protect 80,000 businesses across the UK from 1 April 2023.

Relief for hospitality, retail and leisure businesses will also increase to 75%, equating to £110,000 per business in 2023-24.

Hunt added that NIC thresholds would also be affected, saying:

“While I have decided to freeze the employer’s NICs threshold until April 2028, we will retain the Employment Allowance at its new, higher level of £5,000. 40% of all businesses will still pay no NICs at all.”

In a bid to avoid fraudulent R&D claims, the Chancellor announced that the SME additional deduction, as part of the SME R&D scheme, would be slashed from 130% to 86%. The Government will also reduce the SME company credit rate from 14.5% to 10%.


What this means for you

The many changes expected to roll out over the coming years are likely to affect businesses and individuals across the country. It helps to have an expert accounting team to keep you updated with anything that could impact you or your business.

If you need any advice, our team is waiting to hear from you. Contact us today to discuss these tax changes.

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