A Summary of the Autumn Statement 2022
A Summary of the Autumn Statement 2022
Chancellor Jeremy Hunt, having reversed the points offered by the previous Chancellor, revealed the points proposed for this Autumn statement budget, with the plan to increase tax rises and spending cuts to the tune of billions in order to remedy the current situation in the international markets and the nation’s finances. The points of the chancellor show that it will cause more damage to the pockets of citizens but show signs that the most vulnerable society can try to be protected during this winter.
The main announcement that we should take note of is that income tax rates for people who fall within the personal allowance and basic rate bands will remain unchanged until 2028, at least initially. However, the threshold for those in the higher rate band will drop from £150,000 to £125,140. This means that anyone making more than £125,141 will ultimately have to pay tax at a rate of 45% on every additional pound earned.
One of the major concerns for both the current government and the Bank of England has been how to combat and begin to reduce inflation. It is currently 11.1%. According to the government’s independent forecasters, the Office for Budget Responsibility (OBR), inflation will fall to 7.4% next year. Inflation is set to be 2%. Despite having a significant impact on households, both the chancellor and the government hope that the measures outlined in this statement will aid in lowering the inflation rate.
The government has previously proposed for an Energy Price Guarantee (EPG), which would cap the price of energy per unit. This means that beginning in October and continuing through the winter, each household’s energy bills will be capped at £2,500 per year. The cap was set to expire in April 2023 and, according to analysts, was set to rise to £3,700. Chancellor Hunt proposes through the Autumn Statement that this cap would be extended for 12 months, but that it would be less generous than it is now, and that the EPG would be raised to £3,000 per year in April 2023.
After so much uncertainty regarding the corporation tax rate’s future. The chancellor decided to keep it as in the mini-budget offered this autumn. Consequently, starting in April 2023, the rate will rise to 25% for businesses with profits of more than £250,000. For businesses with £50,000 or less in small profits, the 19% rate will now apply. Due to marginal relief, businesses with profits between £50,001 and £250,000 will be taxed at the lower main rate.
R&D Tax Relief
The government stated that beginning in April 2023, the R&D Expenditure Credit (RDEC) rate would rise from 13% to 20%, but that for small and medium-sized businesses (SME), the additional deduction would drop from 130% to 86% and the SME credit rate would drop from 14.5% to 10%.
The government has also confirmed that from April 2023 it will reduce the dividend allowance from £2,000 to £1,000. It will reduce the dividend allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024. Something that has caused quite a furore amongst the population as this is one of the ways people save for retirement to combat the constant inflation each year.
The government announced in September that the reduction in stamp duty for some homebuyers in England and Northern Ireland would be permanent. The threshold for paying stamp duty has increased from £125,000 to £250,000 (£425,000 for first-time buyers), and the discounted rate for first-time buyers now applies to properties up to £625,000 rather than the previous cap of £500,000.
Now that a deadline has been established by the chancellor in these autumn statement, these cuts will be undone by the end of March 2025.
The chancellor finally announced that the state pension would increase by 10.1% to keep up with inflation after months of speculation.
The new state pension will increase from £185.15 to £203.85 per week as a result. For those who reached state pension age prior to April 2016, the basic state pension will increase to £156.20 per week from its current level of £141.85. Low-income individuals can supplement it with the 10.1% increase in Pension Credit.
Early in the following year, the government will release its review of the state pension age, which is currently 66 and will increase to 67.
In a bid to help citizens cope with the rising costs of covering electricity bills, inflation and interest rates, Chancellor Jeremy Hunt has announced that, from April 2023, the minimum wage for all over 23 year olds will rise to £10.42 an hour, an increase of 9.7% or 92pence. This is still less than the cost of inflation this year.
In April 2023, the statutory minimum wages will be:
National Minimum Wage for over 23s: from £9.50 to £10.42 an hour.
National Minimum Wage for 21 to 22 year olds: increases from £9.18 to £10.18
National Minimum Wage for 18-20 year olds: increases from £6.83 to £7.49
National Minimum Wage for under 18 year olds: increases from £4.81 to £5.28
Apprentice rate: increases from £4.81 to £5.28.
Advice on Autumn Statement 2022
For any advice on what the new tax changes could mean for you or your business, please do not hesitate to contact one of our accountants. If you would like to know more about how the previous statements went or detailed information on each type of taxation please feel free to check out our articles.
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