Autumn Statement – 17 November 2022
The Chancellor Jeremy Hunt’s Autumn Statement came against the background of a Spring Statement and a September ‘mini-Budget’ (which has now been substantially reversed). The overall context is a European recession and high inflation in the wake of the pandemic and the war in Ukraine.
The Autumn Statement was presented as a difficult and necessary exercise to restore confidence in the UK’s financial position.
The economic backdrop to the Autumn Statement was a challenging one, with the Chancellor confronted by a combination of over 11% inflation, recession and the need to re-establish the UK’s financial credibility. The question remains, however, whether the UK economy will fulfil the relatively optimistic growth forecasts now implicit in the projections of the Office for Budget Responsibility (OBR).
- The main income tax allowances and thresholds, the main national insurance thresholds plus the inheritance tax nil rate bands will stay at their current levels for an extra two years to April 2028.
- The threshold for the 45% additional rate of income tax will reduce from £150,000 to £125,140 from April 2023.
- The dividend allowance will reduce from £2,000 to £1,000 from April 2023 and be halved again to £500 from April 2024. The capital gains tax annual exempt amount will be cut from £12,300 to £6,000 for 2023/24 and halved to £3,000 from April 2024.
- The government’s energy price guarantee will be adjusted from April 2023 so that the typical household will pay £3,000 a year.
- The state pension, pension credit, universal credit (UC), the benefit cap and certain other benefits will increase by 10.1% in line with CPI inflation to September 2022.
- Business rates bills in England will be updated from April 2023 to reflect April 2021 property values and there will be a £13.6 billion package of targeted support for businesses over the next five years.
- Research and development tax reliefs will be reformed with respect to expenditure incurred from 1 April 2023.
- The windfall profits of oil and gas companies will be subject to further tax increases and a new levy will apply to the ‘extraordinary returns’ of low-carbon electricity generators.