Autumn Statement 2022
The Chancellor unveiled his Autumn Statement on 17 November 2022. There were a series of important and much-anticipated announcements included – some of the key items are covered below.
The headline rate of Corporation Tax will increase to 25% for companies with over £250,000 in profits from 1 April 2023. As previously planned, there will be a marginal rate applied for profits from £50,000 to £250,000, and profits up to £50,000 will remain at 19%.
Research and Development (R&D) tax reliefs
The Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20% for expenditure on or after April 2023.
The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10% for expenditure on or after April 2023.
The personal allowance will remain frozen at £12,570 for a further two years until 6 April 2028.
The higher rate threshold will remain frozen at £50,270 for a further two years until 6 April 2028. The threshold for the top rate of income tax is lowered; the 45% additional rate of income tax will include those earning over £125,140 from 6 April 2023.
The annual dividend allowance will decrease from £2,000 to £1,000 from 6 April 2023 and to £500 from 6 April 2024. The dividend rates of income tax will remain at 8.75%, 33.75%, and 39.35% respectively for 2023/24.
National Insurance thresholds frozen
The National Insurance threshold, which currently sits at £12,570, has been frozen until April 2028.
UK national living wage rise
The UK national living wage will rise for people over the age of 23 from £9.50 to £10.42 an hour starting from April 2023.
Tax-free allowances for capital gains tax cut
Tax-free allowances for capital gains tax will be cut, decreasing from £12,300 to £6,000 from April 2023. It will then drop further to £3,000 from April 2024.
Threshold for Employer National Insurance contributions fixed
The threshold for Employer National Insurance contributions is to be fixed until April 2028. The Employment Allowance will be retained at its present level of £5,000.
Planned revaluation of business rates will go ahead next year
Business rate bills were to be updated to reflect changes in property values since the last revaluation in 2017. This will go ahead in April 2023, as previously planned.
Support for business rates payers
The multiplier on business rates will be frozen in 2023-24, keeping the small business multiplier and standard multiplier at 49.9p and 51.2p respectively. Relief for businesses in the retail, hospitality and leisure sectors will be increased from 50% to 75% next year, up to £110,00 per business. A new Transitional Relief scheme was announced, capping bill increases for businesses with higher business rates bills as a result of revaluation. Small businesses that lose eligibility for either the Small Business or Rural Rate relief as a result of the new property revaluations will see their bill increases capped at £600 per year from April 2023.
Electric cars will lose their exemption from Vehicle Excise Duty as of April 2025. Company car tax for electric vehicles will increase by 1% year-on-year for three years from 2025.
VAT registration threshold
The VAT registration threshold is due to be maintained at its current level until March 2026.
Authored by: Cambridge Team