The Chancellor, Jeremy Hunt, has given his first Autumn Statement.
We have highlighted below some of the key tax announcements made by the Chancellor:
Personal tax thresholds
The Chancellor has announced that personal tax thresholds will be frozen for a further two years, until April 2028. This includes the income tax personal allowance, the higher rate threshold, and the main National Insurance and inheritance tax thresholds.
Top rate of income tax
The threshold for the top rate of income tax (the additional rate) is being reduced from £150,000 to £125,140 from April 2023.
State pensions and benefits
The Chancellor has confirmed that the state pension and means-tested benefits will rise by 10.1% in line with inflation.
Capital Gains Tax (CGT)
The CGT annual exemption will reduce from £12,300 to £6,000 in 2023-24 and to £3,000 in 2024-25.
Dividend allowance
The tax-free dividend allowance will reduce from £2,000 to £1,000 in 2023-24, then fall to £500 in 2024-15.
Stamp Duty Land Tax (SDLT)
The cuts to Stamp Duty Land Tax announced in September in ‘The Growth Plan’ will only remain until 31 March 2025. This relates to the increase to the residential nil rate tax threshold from £125,000 to £250,000 and the increase in the threshold for First Time Buyer’s Relief from £300,000 to £425,000.
VAT
The VAT registration threshold has been frozen at £85k until 2026.
R&D Tax Relief
There will be major reforms to Research and Development tax reliefs. The small and medium-sized enterprises (SME) scheme will be made less generous – by reducing the additional deduction from 130% to 86% and reducing the SME credit rate from 14.5% to 10%. Whereas the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%. The government will consult on the design of a single new scheme to replace the SME and RDEC schemes.
National Living Wage
The National Living Wage will increase in April 2023, from £9.50 an hour for over 23s to £10.42 an hour.
Free initial meeting
Stephen Charles
Tax Partner, Sheffield
Aaron Hemmington
Tax Partner, Northampton
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