Autumn Statement 2022

The new chancellor, Jeremy Hunt, revealed the Autumn Statement on the 17^th November. A summary on the headline points is provided below:

State Pension

The Triple Lock for the State Pension is being reinstated, with State Pensions receiving the full inflationary increase of 10.1% (September 2022 CPI measure). As a result, the full flat-rate State Pension for individuals who reached State Pension after April 2016 will be £203.85 pw (£10,600 pa) from April 2023.

Income Tax

The income tax Personal Allowance, higher rate threshold, and the National Insurance limits are already fixed at their current levels until April 2026. This has now been extended for an additional two years, until April 2028.

In addition to this, the income tax additional rate threshold (45%) will be lowered from £150,000 to £125,140, from April 2023.

Inheritance Tax

The inheritance tax nil rate band was frozen at £325,000 until 2026. This has now also been extended until 2028. This will mean the tax-free allowance has been unchanged for almost two decades by that point.

Capital Gains Tax (CGT)

Changes to CGT have long been on the cards. This was another tax allowance that had previously been frozen until 2026. However, the Annual Exempt Amount of £12,300 will instead be cut to £6,000 from April 2023 and then to £3,000 from April 2024. The rates of CGT applied to amounts over this exemption are to remain unchanged.

Dividends

The Dividend Allowance is to be reduced from its current level of £2,000 pa also. This will be £1,000 pa from April 2023 and then £500 pa from April 2024. This is the level of dividends an individual can earn before tax is due on those dividends. Above this level, the tax rate incurred on dividends will remain unchanged.

Other Announcements

Some other announcements were:

• Previously announced but confirmed again, Corporation Tax will increase to 25% from April 2023.

• The increases to Stamp Duty Land Tax thresholds will now only remain in place until 31^st March 2025.

• Oil and gas companies tax rate will increase from 25% to 35%, starting in January 2023. This windfall tax has also been extended, previously set to end in December 2025 but now ending in March 2028.

• A 45% tax on profits of older renewable and nuclear electricity generation.

• The cap on energy bills of £2,500* pa for an average household will remain in place until April 2023. This will then rise to £3,000* pa for 12 months.

*This cap sets a maximum price that energy suppliers can charge consumers for each unit of energy they use. Therefore, how much you pay will still depend on how much energy you use.