The Chancellor, Jeremy Hunt has presented his Autumn Statement 2022 accompanied by a report by the Office of Budget Responsibilities.
Income Tax thresholds
From April 2023:
The Additional Rate Threshold (ART) is reduced to £125,140 (from £150,000)
The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland.
The ART for savings and dividend income will apply UK-wide.
There are no further changes to the Personal Allowance which remains at £12,570, the Higher rate threshold remains at £50,270.
Married Couples’ Allowance and Blind Persons Allowance
From April 2023:
Both allowances are updated by the September CPI figure of 10.1%.
The Married Couple’s Allowance rises from £3,640 to £4,010 (min) and from 9,415 to £10,375 (Max)
The Blind Person’s Allowance will rise from £2,600 to £2,870.
National Insurance contribution rates and thresholds
There are changes made to Class 2 and 3 NICs (self employed) in 2023-24
From April 2023
Class 1 lower earnings limit remains at the 2022-23 level of £6,396 per annum (£123 per week).
The class 2 small profits threshold remains at the 2022-23 level of £6,725.
Class 2 and Class 3 NICs rates will increase by the September CPI figure of 10.1%.
The Class 2 rate will be £3.45 per week, and the Class 3 rate will be £17.45 per week.
The other NICs thresholds will be fixed at their current levels until April 2028
NICs (Employers) Secondary NICs
No changes to rates or thresholds:
The Secondary Threshold is fixed at £9,100 until April 2028 and the Employers' NICs allowance is unchanged
National Living Wage (NLW) and National Minimum Wage (NMW)
From April 2023, the NLW/NMW rates increase to:
Individuals aged 23 and over: £10.42 per hour.
21-22 year olds: £10.18 per hour.
18-20 year olds: £7.49 per hour.
16-17 year olds: £5.28 per hour.
Apprentice rate: £5.28 per hour.
Accommodation offset rate: £9.10 per hour.
From April 2023 the dividend allowance reduces from £2,000 to £1,000.
From April 2024 the allowance reduces from £1,000 to £500.
Capital Gains Tax (CGT)
From April 2023, the CGT Annual Exempt Amount reduces from £12,300 to £6,000.
From April 2024, the allowance permanently reduces from £6,000 to £3,000 for individuals and personal representatives.
From 2024-25 it will be permanently fixed at £1,500 for most trustees.
The proceeds reporting limit for CGT is fixed at £50,000 from April 2023.
From on or after 17 November 2022:
Shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK.
This will have effect where an individual has a material interest in both the UK and the non-UK company and where the share exchange is carried out on or after 17 November 2022.
The Inheritance Tax nil-rate bands are fixed until April 2028.
The nil-rate band remains £325,000, the residence nil-rate band remains £175,000, and the residence nil-rate band taper continue to start at £2 million.
Stamp Duty Land Tax The changes made on 23 September 2022 (the Kwasi budget) remain unchanged:
An increase to the nil-rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland.
An increased nil-rate threshold paid by first-time buyers from £300,000 to £425,000.
The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000.
Annual Tax on Enveloped Dwellings (ATED) From April 2023
The annual chargeable amounts for the ATED will be uplifted by the September CPI figure of 10.1% for the 2023-24 ATED charging period.
The government will implement these changes in the usual way through a Treasury Order.
Local authorities in England will be given additional flexibility in setting council tax by increasing the referendum limit for increases in council tax to 3% per year from April 2023.
In addition, local authorities with social care responsibilities will be able to increase the adult social care precept by up to 2% per year.
No change: the VAT Registration and Deregistration thresholds will not change for a further period of 2 years from 1 April 2024.
VED on Electric Vehicles (VED)
From April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles, this measure will apply to cars, vans, motorcycles and tricycles.
New zero-emission cars registered on or after 1 April 2025 will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).
Company Car Tax (CCT) Rates
Rates are set for company Car Tax until April 2028:
Appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by one percentage point from 2025-26 to 2027-28 to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars
Rates for all other vehicles bands will be increased by one percentage point per year to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28
Van Benefit Charge and Car & Van Fuel Benefit Charges
From 6 April 2023
Car and Van Fuel Benefit Charges and van benefit charges will increase in line with CPI.
First Year Allowance for Electric Vehicle Charge points
Spring Finance Bill 2023 will extend the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for Corporation Tax purposes and 5 April 2025 for Income Tax purposes.
Additional Compliance Resource for HMRC
Investment of £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers. This investment is forecast to bring in £725 million of additional tax revenues over the next 5 years.
Tax Conditionality: Licensing in Scotland and Northern Ireland Postponed to October 2023
A requirement to make the renewal of certain licenses in Scotland and Northern Ireland conditional on applicants completing checks to confirm they are appropriately registered for tax will now come into force for license renewals from October 2023 rather than April 2023.
Online Sales Tax (OST)
Following consultation, the government has decided not to introduce an OST, reflecting concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models. A response to the OST consultation will be published shortly.
From 1 April 2023
Business rate bills in England will be updated to reflect changes in property values since the last revaluation in 2017.
The business rates multipliers will be frozen in 2023-24 at 49.9 pence and 51.2 pence.
Upwards Transitional Relief will for three years, support properties by capping bill increases caused by changes in rateable values at the 2023 revaluation. The ‘upward caps’ will be 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24
Support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24.
Supporting Small Business Scheme (SSBS) bill increases for the smallest businesses losing eligibility or seeing reductions in SBRR or Rural Rate Relief (RRR) will be capped at £600 per year from 1 April 2023 over three years.
Business Rates: Improvement Relief
From April 2024
The new improvement relief, announced at Autumn Budget 2021, will ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy.
Previously proposed technical changes to adjust the super-deduction rules, as required for the proposed scrapping of the increase in the main rate of Corporation Tax, are no longer required as the main rate will increase in April 2023 as originally planned.
It has been confirmed that the Annual Investment Allowance (AIA) will be permanently set at £1 million, as previously announced.
Reforms to Research and Development (R&D)
From 1 April 2023:
Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%.
The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
The SME credit rate will decrease from 14.5% to 10%.
Audio-visual creative reliefs
Consultation on a new version of the creative industry tax reliefs.
The government will consult on a series of proposals that will go further to incentivise the production of culturally British content and support the growth of the audio-visual sectors, ensuring these highly skilled industries continue to thrive in the UK.
Transfer pricing documentation: Master File / Local File
From April 2023, large multinational businesses operating in the UK will be required to keep and retain transfer pricing documentation in a prescribed and standardised format, set out in the OECD’s Transfer Pricing Guidelines (Master File and Local File).
Bank Corporation Tax Surcharge
From April 2023, banks will be charged an additional 3% rate on their profits above £100 million.
Increasing the rate of Diverted Profits Tax
From April 2023, the rate of Diverted Profits Tax will increase from 25% to 31%, in order to retain a six percentage points differential above the main rate of Corporation Tax, and remain an effective deterrent against diverting profits out of the UK.
OECD Pillar 2
For accounting periods beginning on or after 31 December 2023
The globally agreed G20-OECD Inclusive Framework Pillar 2 framework will introduce:
An Income Inclusion Rule (IIR) that will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%
A supplementary Qualified Domestic Minimum Top-up (QDMTT) tax rule which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%.
Both the IIR and QDMTT will incorporate the substance-based income exclusion that formed part of the G20-OECD agreement. This will be legislated for in Spring Finance Bill 2023.
The government intends to implement the backstop Undertaxed Profits Rule in the UK, but with effect no earlier than accounting periods beginning on or after 31 December 2024.
Following applications from business stakeholders tariffs are removed over 100 goods for two years to help put downward pressure on costs for UK producers. The measure will remove tariffs on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.
Energy Price Guarantee
The current cap will be raised from April 2023, with the average household energy bill increasing from £2,500 to £3,000 per annum. This cap will last until March 2024.
The level of support for households using alternative fuels is to be doubled from £100 to £200. For Northern Ireland, this will be paid to all households.
A new approach will be developed for consumer protection in the energy market in an effort to stop the current situation happening again.
Energy Profits Levy (EPL)
From 1 January 2023, the EPL rate will rise from 25% to 35%.
Electricity Generator Levy
1 January 2023 a temporary 45% tax will be levied on extraordinary returns from low-carbon UK electricity generation. The tax will be limited to generators whose in-scope generation output exceeds 100GWh across a period and will only then apply to extraordinary returns exceeding £10 million.