The Autumn Statement – what does it mean for you?

Today, the Chancellor of the Exchequer, Jeremy Hunt outlined a series of sweeping measures to include tax changes and hidden tax increases, and cuts to Government spending.

We highlight the main points below which will affect us all, and if you have any specific questions about these matters, please do not hesitate to contact a member of the team.

  • Income Tax: No changes to Personal Allowances, (the amount you can earn before you pay tax) so kept at £12,570 and will be frozen at this level until 2028. Income tax thresholds, the point at which you pay taxes of 20% and 40%, have been frozen and extended further to 2028. However, for those in the additional rate of tax at 45p which was for those who earned more than £150,000, this threshold has been reduced to £125,140. If you earn more than £150,000 now, you can expect to pay £1,200 more per year in tax. This is from April 2023.
  • National Insurance: Similarly to income tax, National insurance thresholds have been frozen for a further 2 years, until 2028.
  • Dividend Taxation: At present, the first £2,000 of dividend income each year is tax free. This will reduce to £1,000 from April 2023, and then reduce further to £500 from April 2024.
  • Capital Gains Tax: At present, the first £12,300 of any Capital Gain is free of tax; this is called the Annual Exemption. From April 2023, the Annual Exemption will reduce to £6,000 and then a further reduction in April 2024 to £3,000.
  • State Pension: From April 2023, State Pension will increase by the rate of inflation (inflation is 11.1% today) but will likely be lower in April. The biggest increase in the State Pension payment ever.

Our thoughts?

The Chancellor has avoided the phrase ‘tax rises’ with this Statement. Whilst there have been no direct increases in the rate of taxes or national insurance, the Chancellor has effectively increased tax and national insurance discreetly for us all by freezing the thresholds at which people start paying certain levels of tax. What this means though is that if people’s wages go up all the way until 2028, but the tax levels stay the same, they may not feel as big an impact from the salary increase. That’s because they will be paying more in taxes than they would have otherwise if the thresholds and personal allowances were increased as they would have been.

If you have any queries or concerns about the budget announcements today or require support to review and advise on your business or personal tax status, then please do not hesitate to contact us.