Jeremy Hunt’s Autumn Statement was used as an attempt to calm markets and deliver stability. As a consequence of poor growth and increased borrowing the focus of this year’s statement was to satisfy the money markets that the new fiscal rules on borrowing will evidence that the UK “will always pay its way” and that borrowings will be “more than halved” by the actions in the Autumn statement.
So, what does that mean for you? Kate Stephen, Financial Planner at Francis Clark Financial Planning takes a look.
Overall, this means the Treasury will receive a boost which is ultimately funded by the taxpayer. Changes to Capital Gains Tax (CGT), the Dividend Allowance and Inheritance Tax (IHT) are hugely significant for those with accumulated wealth and will see the taxman take a growing share of private wealth to help plug the gap in the nation’s finances.
- There will be a number of threshold freezes for Income Tax and Inheritance Tax for an additional two years, on top of an existing four-year freeze, to April 2028
- Additional rate Income Tax threshold is to be reduced from £150,000 to £125,140
- Capital Gains Tax annual allowance will be reduced to £6,000 p.a. from April, with a further cut to £3,000 p.a. in 2024/25
- Dividend Allowance will be halved to £1,000 p.a. for 2023/24 and then cut again to £500 p.a. in 2024/25.
- The increase to National Insurance (NI) to help pay for social care reforms has been scrapped and will remain at current rates
- From a business perspective the government will make almost £14bn tax cuts on business rates which will benefit about 700,000 businesses
- Employment allowance will be retained at a higher level of £5,000
- Corporation Tax will increase to 25% from the 1 of April 2023, however, small companies with profits below £50,000 will continue to pay at the current rate of 19%
- There will also be a reintroduction of tapering relief for businesses with profits between £50,000 and £250,000 so that they pay less than the main rate
- The State Pension triple lock, that was going to be abandoned for 2022/23, will be reinstated. This means that the State Pension and Pension credit will increase by 10.1% in line with the CPI inflation measure for September 2022.
With these cuts and freezes to allowances it will become more imperative from a personal, and also business owner perspective, to make the most of tax allowances available and maximise the use of tax efficient savings into pensions and ISAs.
To discuss investments, pensions, inheritance and more, please contact: [email protected].