The Autumn Statement 2022 – What does this mean for your finances?
Autumn Statement 2022 – What does this mean for your finances?
The Autumn Statement 2022 has caused a stir for businesses, employees and individuals. So let’s take a look at the upcoming changes and break down some key points that may affect you.
Income Tax, personal allowance and higher rate thresholds are frozen until April 2028. However, 45% tax-payers who will see a reduction from £150,000 to £125,140 from April 2026. Still, millions of employees will be affected if their income rises as they will have less take-home pay.
Dividend tax-free allowances are to be cut in 2023 and 2024. Business owners and investors relying on dividend income will be affected by these changes. The tax-free dividend allowance currently sits at £2,000, though this will fall to £1,000 in April 2023, and then to £500 in April 2024.
Capital Gains Tax
The tax-free allowance for capital gains will see a significant drop from April 2023. Currently, the tax-free allowance is £12,300, this will drop to £6,000 in April 2023, and then to £3,000 in April 2024. If you are an investor, landlord or second homeowner planning to dispose of assets then you might want to take this into consideration before the changes come into effect.
The current thresholds for National Insurance and Inheritance Tax (IHT) will be frozen until April 2028. The Inheritance tax main bands – Nil-Rate Band (£325,000) and Residence Nil-Rate band (£175,000) will remain frozen until April 2028.
National Insurance lower earnings limit (LEL) and small profits threshold (SPT) will remain fixed until 2023/24.
The Upper Secondary Threshold will stay fixed at £50,270 per annum until April 2028. Class 2 national insurance is now set at £3.45 per week and class 3 rate set at £17.45 per week for tax year 2023/24.
Stamp Duty Land Tax (SDLT)
Due to the prediction that the property market will be slowing down over the next few years, Jeremy Hunt has announced to keep the current Stamp Duty cuts in place until 31st March 2025. These changes were previously announced by Kwasi Kwarteng, where the threshold was permanently doubled from £125,000 to £250,000 with first-time buyers paying no stamp duty on the first £425,000 of a new home, up from £300,000 previously.
The Chancellor confirmed that the basic state pension and the new state pension will increase by inflation (10.1%) next April.
There was no mention of a fundamental change to pensions tax relief, However, because of reducing the additional rate threshold from April 2026 to £125,140 (previously £150,000) pension contributions for those impacted look like a good way to mitigate the tax increase.
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