What key changes did Chancellor Jeremy Hunt announce in today’s Autumn Statement?
Income Tax:
The Chancellor was quick to point out that there are no increases to the headline rates of tax. However, this does not mean that individuals won’t pay more income tax, quite the opposite in fact. The threshold at which the 45% rate of income tax kicks in will be reduced from £150,000 to £125,140 from 6 April 2023. The personal allowance will remain at the current level until April 2028. As wages are increasing, albeit at a lower rate than inflation, this means that some low earners will start to pay income tax. The freeze on the threshold at which the 40% rate of tax is paid has also been extended by two years to 2028. The tax-free dividend allowance will be cut to £1,000 from April 2023 then to £500 the following year.
National Insurance (NI):
The employment allowance will remain at the current level of £5,000. The main NI thresholds will also be held at the current level until April 2028.
Capital Gains Tax (CGT):
There is no change to the CGT rates, but the annual exempt amount will be cut from £12,300 to £6,000 from 6 April 2023, and then to £3,000 the following year.
Other Announcements:
- The increase in stamp duty land tax allowances announced at the mini-Budget will be retained, but only until 31 March 2025.
- The nil rate band which is the amount an individual can leave tax free on death, will be frozen at £325,000 for a further two years until 2028.
- Electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
- The energy profits levy will increase to 35% from 25% and extended from four to six years.
- National living wage to increase to £10.42 per hour from 1 April 2023.