AUTUMN STATEMENT – November 2022

Income Tax

The additional rate threshold is being reduced to £125,140 from 6 April 2023. The personal allowance is reduced by £1 for every £2 earned over £100,000 and is fully withdrawn once an individual’s income reaches £125,140. The additional 45% main rate and 39.35% dividend rates of tax will apply to income above this level. 

Dividends allowance

This being halved from its current £2,000 to £1,000 from 6 April 2023. It will be halved again to £500 from 6 April 2024.

Capital Gain Tax.

The CGT annual exempt amount is being cut from its current £12,300 level to £6,000 from 6 April 2023, and to £3,000 from 6 April 2024.

Additionally, several allowances and thresholds will be frozen at their current levels until April 2028. This includes the income tax personal allowance (£12,570), national insurance contributions (NIC) thresholds (various), the inheritance tax nil rate band (£325,000) and residence nil rate band (£175,000).

NIC thresholds, rates and employment allowance

The 2022/23 tax year has seen an uplift in many thresholds from 6 July and a reduction in many rates from 6 November. The Autumn Statement confirms that many of the NIC thresholds will remain fixed from 2023/24 until April 2028.

However, two NIC thresholds have been confirmed for 2023/24 only. The class 1 lower earnings limit will remain at the 2022/23 level of £6,396 per annum (£123 per week) in 2023/24. The class 2 small profits threshold will remain at the 2022/23 level of £6,725 in 2023/24.

The class 2 and class 3 rates will increase based on the September CPI figure of 10.1%. The class 2 rate will increase to £3.45 per week in 2023/24 from £3.15 per week and the class 3 rate will increase from £15.85 to £17.45 per week in 2023/24.

National living wage and national minimum wage

The national living wage hourly rate will increase to £10.42 per hour from 1 April 2023 for those aged 23 and over.

The government has also accepted the Low Pay Commission’s recommendations for the other national minimum rates to apply from the first pay period starting on or after 1 April 2023, as follows:

  • increasing the rate for 21-22 year olds to £10.18 an hour (10.9%);
  • increasing the rate for 18-20 year olds to £7.49 an hour (9.7%)
  • increasing the rate for 16-17 year olds to £5.28 an hour (9.7%);
  • increasing the apprentice rate to £5.28 an hour (9.7%); and
  • increasing the accommodation offset rate to £9.10 an hour (4.6%).

Changes to the taxation of electric vehicles

From 1 April 2025, electric vehicles will no longer be exempt from vehicle excise duty (VED). VED will be introduced for electric cars, vans and motorcycles. Zero-emission vehicles registered on or after 1 April 2025 will pay the lowest rate of VED, currently £10, in the first year. This will increase to the standard rate, currently £165, from the second year of registration onwards. Zero-emission vehicles registered before 1 April 2025 will pay the standard rate from 1 April 2025.

The appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% in 2025/26, a further 1% in 2026/27 and a further 1% in 2027/28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars. Rates for all other vehicle bands will be increased by 1% for 2025/26 up to a maximum appropriate percentage of 37%, remaining at that level in 2026/27 and 2027/28.

The current 100% capital allowance for the provision of electric vehicle charge points that had been due to expire in 2023 will be extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

Stamp duty land tax

With effect from 31 March 2025, the cuts to stamp duty land tax in England and Northern Ireland announced at the 23 September mini-budget will be reversed. 

Changes to company tax reliefs

The Chancellor announced changes to research and development (R&D) tax relief to take effect from 1 April 2023. The deduction rate for qualifying expenditure under the SME scheme will be cut from 130% to 85%. The cash repayment credit under the SME scheme will also be reduced from 14.5% to 10%. However, the credit amount available under the large company R&D expenditure credit (RDEC) scheme will be increased from 13% to 20%. 

Supporting businesses

Import tariffs will be removed for two years on over 100 goods, including aluminium frames used by UK bicycle manufacturers and ingredients used by food producers. The highest duty rate being suspended is 18%. The tariff suspensions come after applications were made by UK businesses.

Government has decided not to introduce an online sales tax (OST).

Please contact Aaron Associates for further details. Telephone number +44 (0) 20 8665 0767