18th November 2022The Autumn Statement: tax changes to be aware of

The Chancellor has announced the Autumn Statement – and there are some milestone tax changes to be aware of.

Today was always going to be a difficult Budget – hard decisions needed to be made. The number one thing that UK businesses need now is certainty.

Here are some of our key takeaways:

Higher rate income tax changes:

• The point at which higher earners start paying the top rate of tax will be lowered to £125,140 from £150,000

Tim Walford-Fitzgerald, Private Client partner said:

“The Chancellor has stuck to his word. The changes to personal taxes announced today will mean that those with the broadest shoulders will see and feel the greatest impact. The decision to reduce the threshold at which the highest rate of tax is applicable from £150,000 to £125,140 will be felt by only those in the country earning the biggest salaries.”

Dividend tax allowance changes

• The dividend allowance will be halved from £2,000 to £1,000 and then halved again to £500 in 2024

Commenting on the change, Jamie Morrison, Head of Private Client said:

“This may be targeted at wealthy investors, but the reality is it will have big consequences for entrepreneurs and small businesses. The UK economy is struggling and we should be driving creativity and innovation, instead the Chancellor is crushing entrepreneurial spirit.”

 Capital Gains Tax reduction

• The Capital Gains Tax annual exemption will halve from £12,300 to £6,000 from April 2023
• It will then drop to £3,000 from April 2024

Tim Walford-Fitzgerald, Private Client partner explains:

“The decision to more than halve the £12,300 tax-free allowance for capital gains to £6,000 means many could find themselves paying the tax for the first time on modest share portfolios. This is bad news for landlords, second home owners and those looking to sell their property as Capital Gains tax is applied at a much higher rate for residential property sales.

“Expect to see a decline in the number of disposals – people will hold off from selling their assets during unfavourable conditions. Or, as there is a delayed introduction for the new threshold, look out for a quick spike in sales as individuals and families try to beat the new implementation date.”

Other key changes include: 

• A freeze in income tax thresholds which will mean millions of people pay more in tax
• The state pension and means-tested benefits payments will both increase in line with inflation (10.1%) in April 2023
• The Inheritance Tax nil rate band and residence nil rate band have been frozen at £325,000 and £175,000 until 2028
• Stamp Duty cuts to stay until March 2025
• Energy firms will be hit with an expanded Windfall Tax of 35%, up from the 25% already levied
• Electric vehicles will no longer be exempt from Vehicle Excise duty from April 2025
• Support for energy bills is expected to remain in place – but become less generous from April 2023

If you would like to discuss what these changes mean for your personal circumstances, please get in touch with us directly.