Anyone that knows me, knows that I love nerdy movies. There are certain rules about how trilogy movies work, I’d love to draw analogies to the UK Budget, Tax and Statement however… I’m losing track on what movie number it is, are we in a trilogy or a trilogy of trilogies!
Anyway, let’s update you on what we know about business and tax from the UK Autumn Statement 2022.
Personal Tax
It has already been announced that the personal tax rate of 19% is being reversed back to 20% and the Autumn Statement confirmed that it will remain at 20% and not be increased. The 40% and 45% rates are also unchanged.
The personal tax free threshold is also remaining at £12,570 and this is now frozen until 2028.
The Higher Rate tax band of 45% has been lowered from £150,000, down to £125,140.
Minimum Wage
The minimum wage will be increased from £9.50 to £10.42 an hour from April 2023 for people aged over 23.
Dividend Tax
Let’s start with the good news…..
Dividend Tax rates are being frozen at their current rates! This is good news because previous (or previous, previous, previous) Chancellor Rishi Sunak had planned to increase the rates.
However, the tax free dividend allowance has been cut. From April 2023 it will go down to £1,000 and then April 2024 down further £500!
Capital Gains Tax
There has also been a reduction in the tax free allowance for Capital Gains Tax.
The individual allowance for CGT has gone from £12,300 to £6,000 from April 2023 and £3,000 from April 2024
VAT
The VAT threshold at £85,000 until 2026, which is the turnover at which businesses need to register to pay the tax.
Research & Development
The previous value of 130% has been reduced, the deduction rate for small business research and development rate will now become 86 per cent
Views
This Autumn Statement is a marked change from the Mini-Budget back in September and it’s a move away from the “Low Tax, Small Government” mantra. Jeremy Hunt has drawn a line in the sand, he’s implemented changes to address national debt and borrowing.
Crucially, he’ given fairly long term timescales to work with. Like it or not, the markets like stability and this Autumn Statement has given the markets the long term stability.
Of course, this is great news that we now appear to have some long term tax rules to play the game with, but it’s worthwhile mentioning that the next General Election must take place be 23 January 2025 at the latest, so it’s highly unlikely these rules will remain in place until 2028.
But right now, the UK needs stability and this is what appears to have been put in place.
