On Thursday 17 November 2022, Chancellor Jeremy Hunt presented his Autumn Statement. A full summary can be found in the link below.

Highlights include:

Income Tax

• Basic rate of income tax remains at 20% indefinitely
• 45% additional rate will be lowered from £150,000 to £125,140 from 6 April 2023
• Personal allowance fixed at current £12,570 level until April 2028
• Higher rate fixed at current £50,270 level until April 2028
• Married couple’s allowance and blind person’s allowance will be uprated by inflation for 2023/24

Dividends

The government confirmed from April 2023 the rates of taxation on dividend income will remain as follows:

• the dividend ordinary rate – 8.75%
• the dividend upper rate – 33.75%
• the dividend additional rate – 39.35%

As Corporation Tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will remain at 33.75%. Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024.

National Insurance Contributions (NICs)

From 6 November 2022:

• Primary Class 1 NICs (employees) generally reduced from 13.25% to 12% and 3.25% to 2%
• Secondary Class 1 NICs (employers) will reduce from 15.05% to 13.8%
• Class 1A (payable by employers on taxable benefits in kind) and Class 1B (payable by employers on PAYE Settlement Agreements) NICs will effectively be averaged over the 2022/23 tax year, so the rate will generally be 14.53%
• For the self-employed, the changes to Class 4 NICs will also be averaged across 2022/23, so rates will be 9.73% and 2.73%
• NICs primary threshold and lower profits limit were increased from July 2022 to align with the personal allowance and will be maintained from April 2023 until April 2028
• Class 2 lower profits threshold will also be fixed from April 2023 until April 2028 to align with the lower profits limit. They will again be £12,570 and £50,270 as appropriate
• Lower earnings limit and the small profits threshold fixed at 2022/23 levels in 2023/24 – £6,396 and £6,725 per annum respectively
• Class 2 and Class 3 NICs rates uprated for 2023/24 to £3.45 per week and £17.45 respectively
• Level at which employers start to pay Class 1 NICs for their employees fixed at £9,100 from April 2023 until April 2028

Capital Gains Tax (CGT)

• CGT annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024

Inheritance Tax (IHT)

• IHT nil-rate bands will stay fixed until April 2028
• Nil-rate band will continue at £325,000
• Residence nil-rate band will continue at £175,000
• Residence nil-rate band taper will continue to start at £2 million

Corporation Tax

• Corporation Tax rise from 19% to 25% from April 2023 for companies with profits over £250,000 confirmed

VAT

• VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively

Vehicles

• Rates for the taxation of company car benefits set until April 2028 and will continue to incentivise the
  take up of electric vehicles
• From 6 April 2023 car and van fuel benefits and the van benefit charge will increase in line with inflation

National Living Wage and National Minimum Wage

The National Living Wage (NLW) and National Minimum Wage will increase from 1 April 2023 as follows:

• the rate for 23 year olds and over to £10.42 an hour
• the rate for 21-22 year olds to £10.18 an hour
• the rate for 18-20 year olds to £7.49 an hour
• the rate for 16-17 year olds to £5.28 an hour and
• the apprentice rate to £5.28 an hour

To read our detailed summary, please Click Here.

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