Chancellor of Exchequer Jeremy Hunt announced tax updates in the Autumn Statement 2022 on 17 November 2022. These tax changes have been introduced to prioritise stability, growth, and public services.
Key Takeaway of the Autumn Statement 2022
- Decrease in Income tax additional rate threshold from £150,000 to £125,140 from April 2023
- Cut in Dividend Allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024
- Planned Corporation Tax increment to 25% will go ahead
- Annual exempt amount for capital gains tax reduced from £12,300 to £6,000 from April 2023 and £3,000 from April 2024
- Cuts in Stamp Duty and Land Tax (SDLT) introduced by Mini Budget 2022 remains
- National Insurance percentage rise reversal of 1.25% remains
- Rise in Married Couple Allowance and Blind Person’s Allowance by 10.1% from April 2023
- Increase in company car benefit in kind by 1% starting from 2025/26
- Annual chargeable amounts for ATED uplifted by 10.1% for the 2023-24 ATED charging period
- Changes in Research and Development (R&D) tax reliefs
Income Tax Rates and Threshold
With effect from April 2023, there will be a decrease in the income tax additional rate threshold from £150,000 to £125,140. This will lead to an additional tax of £1,243 for an additional rate taxpayer.
The basic income tax rate freezes at 20%. There are no other changes in income tax rates and thresholds except those mentioned.
|
Income tax rates |
2022/23 |
2023/24 |
|---|---|---|
|
Basic rate tax – 20% |
£12,571-£50,270 |
£12,571-£50,270 |
|
Higher rate tax – 40% |
£50,271-£150,000 |
£50,271-£125,140 |
|
Additional rate tax – 45% |
Above £150,000 |
Above £125,140 |
Dividend Allowance
The Dividend allowance will be reduced from £2,000 to £1,000 from April 2023, and then to £500 from April 2024.
|
|
2022/23 |
2023/24 |
2024/25 |
|---|---|---|---|
|
Dividend Allowance |
£2,000 |
£1,000 |
£500 |
Corporation Tax
The planned increase in the corporation tax rate from 19% to 25% for companies over £250,000 in profits will go ahead with effect from April 2023.
However, the corporation tax rate will still freeze at 19% for small companies with profits up to £50,000.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporate tax rate.
Annual Exempt Amount: Capital Gains Tax
|
|
2022/23 |
2023/24 |
2024/25 |
|---|---|---|---|
|
Annual Exempt Amount |
£12,300 |
£6,000 |
£3,000 |
The annual exempt amount for capital gains tax from £12,300 to £6,000 from April 2023, then £3,000 from April 2024
Stamp Duty and Land Tax (SDLT)
The Mini Budget 2022 introduced increased thresholds and cut-off rates for Stamp Duty & Land Taxes (SDLT).
From 23 September 2022 onwards, the nil-rate threshold of SDLT doubled to £250,000 from £125,000.
|
|
SDLT Rate | |
|---|---|---|
|
Property or lease premium or transfer value |
Standard First Property |
Additional 3% surcharge |
|
Up to £250,000 (previously up to £125,000) |
0% |
3% |
|
£250,001 to £925,000 |
5% |
8% |
|
£925,001 to £1.5 million |
10% |
13% |
|
above £1.5 million |
12% |
15% |
Previously, you would have qualified for a first-time buyer’s relief while purchasing UK property valued at less than £500,000, which is no Stamp Duty and Land taxes in the initial £300,000.
However, the mini-budget had increased the purchase threshold to £625,000, and you will now pay no Stamp Duty and Land taxes for the purchase of property up to £425,000.
|
Before 23 September 2022 |
After 23 September 2022 |
|---|---|
|
No SDLT up to £300,000 |
No SDLT up to £425,000 |
|
5% SDLT on the portion from £300,001 to £500,000 |
5% SDLT on the portion from £425,001 to £625,000 |
|
Over £500,000 no relief rates |
Over £625,000 no relief rates |
These changes in SDLT will remain in place until 31 March 2025.
National Insurance Contribution
The mini-budget reversed the rise of 1.25% of National Insurance Contribution (NICs), which was introduced in April 2022 from 6 November 2022.
|
Pre-mini budget (applicable from 6 April 2022 to 5 November 2022) |
Post-mini-budget (applicable from 6 November 2022) | |||
|---|---|---|---|---|
| Cell |
Employee |
Employer |
Employee |
Employer |
|
Class 1 NIC |
Salary upto £50,270 at 13.25% Salary above £50,270 @ 3.25% |
Salary above £9,100 at 15.05% |
Salary upto £50,270 at 12%Salary above £50,270 at 2% |
Salary above £9,100 at 13.8% |
|
Class 4 NIC |
N/A |
Profit up to £50,270 at 10.25%Profit above £50,270 at 3.25% |
N/A |
Profit up to £50,270 at 9%Profit above £50,270 at 2% |
This reversal of rise of 1.25% in NIC introduced by Mini-Budget 2022 will still remain in place
Other Income Tax Allowances
Married Couple’s Allowance and Blind Person’s Allowance will be uplifted by 10.1% for the 2023-24 tax year.
|
2022/23 |
2023/24 | |
|---|---|---|
|
Married Couple’s Allowance |
£9,415 |
£10,375 |
|
Married Couple’s Minimum Allowance |
£3,640 |
£4,010 |
|
Blind Person’s Allowance |
£2,600 |
£2,870 |
Company Car Benefits
Benefit in kind charges on electric and ultra-low cars increasing by 1% in each of 2025/26, 2026/27 and 2027/28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars.
All other vehicle bands will increase by 1% in 2025/26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026/27 and 2027/28.
Annual Tax on Enveloped Dwellings (ATED)
The annual chargeable amounts for the ATED will be uplifted by 10.1% for the 2023-24 ATED charging period.
Research & Development
The following changes in Research and Development (R&D) tax reliefs will be applicable for expenditures incurred on or after 1 April 2023:
- R&D expenditure credit increases from 13% to 20%.
- Small and medium-sized enterprises (SME) additional deduction will reduce from 130% to 86%
- SME credit rate will reduce from 14.5% to 10%
Conclusion
Amidst the rising energy prices, high inflation and slowing growth, the government believes these tax changes will help stabilise the economy and reduce inflation.
Our property accountants and tax advisors are well-versed in the contemporary changes in property tax laws to help you make the right decisions.
