autumn statement

The new Chancellor Jeremy Hunt delivered his Autumn Statement today, revealing his plan for stabilising the UK economy and reducing inflation, in the face of what he described to be ‘unprecedented global headwinds’.

Many measures announced in the Government’s ‘mini-budget’ last month have been amended. Here is our summary of the key announcements affecting business owners.

PERSONAL TAX

Income Tax

From April 2023 the threshold at which the 45% additional rate of income tax will apply will reduce from £150,000 to £125,140.

Personal Tax Allowances frozen

The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will stay at current levels for a further two years until April 2028.

Dividends Allowance comes down

The tax-free allowance on dividends will be cut from £2,000 to £1,000 in April 2023 and then to £500 in April 2024.

Capital Gains Tax Exemption Cut

The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024.

Stamp Duty frozen

The current stamp duty cuts will remain in place until 31 March 2025, with Stamp Duty Land Tax (SDLT) only applying to properties over £250,000.

Electric Vehicles to be taxed

Electric cars, vans and motorcycles will be subject to road tax from April 2025.

Minimum Wage increase

The National Living Wage will be increased from £9.50 an hour for over-23s to £10.42 from April next year.

Means-tested benefits, including Universal Credit, will also rise in line with September’s inflation figure of 10.1% from April 2023.

Energy bill support

The household energy price cap will be extended for one year from April 2023. However, instead of £2,500 a year, typical bills will be capped at £3,000.

Additional payments of £900 will also be paid to those on means-tested benefits, £300 to pensioner households and £150 to people on disability benefits.

BUSINESS TAX

As predicted, businesses in the energy sector will be subject to a sharp rise in tax contributions. The key tax changes affecting our clients are as follows:

Corporation Tax

The planned increase in the Corporation Tax rate to 25% for companies with over £250,000 in profits will go ahead.

Employers NICs

The employers NICs threshold will remain at £9,100 until April 2028.

VAT registration

The VAT registration threshold will remain at the current level of £85,000 until March 2026.

Annual Investment Allowance (AIA)

The AIA will be set at a permanent level of £1million from April 2023.

Research and Development (R&D) Tax Relief

The R&D tax relief for SMEs deduction rate is cut from 130% to 86% and the repayable credit rate to 10%, but the rate of the RDEC credit increases from 13% to 20%.

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