The Autumn Statement 2022

On 17 November 2022 the Chancellor of the Exchequer, Jeremy Hunt, delivered his Autumn Statement, the third ‘fiscal event’ in recent months. In contrast to the Growth Plan “mini-Budget” presented by his predecessor Kwasi Kwarteng, the announcements were dominated by tax-raising measures, particularly from extended freezing of thresholds across a range of taxes in the face of inflation running at over 10%.

The Chancellor listed his three priorities – stability, growth, and public services – as he explained that:

  • The OBR confirms that ‘global factors’ are the primary cause of inflation, COVID-19 measures have to be paid for; the war in Ukraine has increased energy costs by eight times.
  • The IMF expects a third of world economies to be in recession next year.
  • Fiscal and Bank of England’s monetary policy must work together and must continue a relentless fight against inflation.
  • The UK is in recession and unemployment is forecast to increase.
  • Public sector borrowing reduction must meet new targets.
  • Policies are intended to tackle inflation and support the economy on a path to growth.

On tax, specific announcements included the following:

Personal taxes

  • The additional rate Income Tax threshold is reduced from £150,000 to £125,140 from 6 April 2023.
  • The personal allowance and other thresholds, including the main National Insurance and Inheritance Tax thresholds are frozen for a further two years, now until April 2028.
  • The dividend allowance is reduced to £1,000 from 6 April 2023, then to £500 from 6 April 2024.
  • The Capital Gains Tax annual exemption is reduced from £12,300 to £6,000 from 6 April 2023, then to £3,000 from 6 April 2024

Business taxes

  • The Employment Allowance for National Insurance Contributions is retained at its increased level of £5,000.
  • The VAT threshold remains frozen until April 2026.
  • The OECD’s global Corporation Tax reforms will be followed up.
  • Rates of enhanced tax relief for research and development expenditure relief are:
    • reduced for SMEs, with the enhanced deduction falling from 130% to 86%, and the rate of credit for surrender of losses reduced from 14.5% to 10%.
    • increased under the R&D expenditure credit scheme, from 13% to 20%.
  • Business rates revaluation will continue.

SDLT: rate increases made in September will continue in place.

Motor vehicles: electric vehicles will cease to be exempt from Vehicle Excise Duty from April 2025

Windfall taxes: from 1 January 2023, the existing ‘energy profits levy’ on oil and gas companies will increase from 25% to 35%; a temporary 45% levy will apply on electricity generators.

Various announcements were made seeking to continue to address the ‘cost of living crisis’:

  • The energy price guarantee will continue, bringing typical household energy bills to:
    • £2,500 from 1 October to 31 March 2023
    • £3,000 from 1 April 2023 to 31 March 2024
  • Extra payments will be made to pensioners and disabled persons.
  • Doubling support to oil and LPG customers.
  • Increases in social rents will be capped to a maximum of 7%.
  • The National Living Wage will increase from £9.50 to £10.42 per hour from 1 April 2023.
  • 10.1% increase in Universal Credit for working families and pension credit.
  • Pensions ‘triple lock’ continues.

With the wide ranging announcments in several areas, your usual DSG contact will always be happy to discuss the impact of these and any other such development on you and your business.