New Chancellor of the Exchequer Jeremy Hunt today made the official Autumn Statement 2022 on 17 November, outlining plans to stabilise and grow the economy. Here are key personal tax changes.

Income Tax

• Previous plans to remove the additional rate of income tax have been scrapped, however, the additional rate threshold will be decreased from £150,000 to £125,140.

National Insurance

• The Lower Earnings Limit and Small Profits Thresholds will be maintained at £6,396 and £6,725 per annum respectively
• The Upper Secondary Threshold, Apprentices Upper Secondary Threshold, and Veteran Upper Secondary Threshold will stay fixed at £50,270 per annum until April 2028
• The Freeport Upper Secondary Threshold will also be fixed at £25,000 per annum
• The government will use the September CPI figure of 10.1% to uprate the Class 2 and Class 3 NICs rates for 2023-24. The Class 2 rate will be £3.45 per week, and the Class 3 rate will be £17.45 per week
• The government will legislate for these measures in affirmative secondary legislation in early

Inheritance Tax

• The inheritance tax nil- rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further 2 years until April 2028
• The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million
• Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax

The government will legislate for these measures in Autumn Finance Bill 2022.

Dividend Allowance and Capital Gains Tax

• The government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023, and to £500 from April 2024
• The Capital Gains Tax Annual Exempt Amount will reduce from £12,300 to £6,000 from April 2023 and to £3,000 from April

The government will legislate for these measures in Autumn Finance Bill 2022.

To address tax avoidance, the government will legislate in Spring Finance Bill 2023 so that 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.

Draft legislation and supporting documents will be published alongside the Autumn Statement.

Electric vehicles

Vehicle Excise Duty on electric cars, vans and motorcycles will be introduced from April 2025 in the same way as petrol and diesel vehicles.

• new zero emission cars registered on or after 1 April 2025 will be liable to pay the lowest first year rate of VED (which applies to vehicles with CO₂ emissions 1 to 50g/km) currently £10 a From the second year of registration onwards, they will move to the standard rate, currently £165 a year
• zero emission cars first registered between 1 April 2017 and 31 March 2025 will also pay the standard rate
• the Expensive Car Supplement exemption for electric vehicles is due to end in 2025.
• new zero emission cars registered on or after 1 April 2025 will therefore be liable for The Expensive Car Supplement currently applies to cars with a list price exceeding £40,000 for 5 years
• zero and low emission cars first registered between 1 March 2001 and 30 March 2017 currently in Band A will move to the Band B rate, currently £20 a year
• zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans
• zero emission motorcycles and tricycles will move to the rate for the smallest engine size, currently £22 a year
• rates for Alternative Fuel Vehicles and hybrids will also be equalised

Public spending

Here are some of the more important public spending announcements to make note of.

Planned departmental resource spending will continue to grow, but slower than the economy, at 1% a year in real terms until 2027-28.

Total departmental capital spending in 2024-25 will be maintained in cash terms until 2027-28, delivering £600 billion of investment over the next 5 years, maintaining the government’s commitments to deliver major infrastructure projects.

While delivering overall spending restraint, the government is prioritising further investment in the NHS and social care, and in schools.

NHS and adult social care

Up to £8 billion of funding available for the NHS and adult social care in England in 2024-25.

Up to £4.7 billion in 2024-25 to put the adult social care system in England on a stronger financial footing and improve the quality of and access to care for many of the most vulnerable in our society. This includes £1 billion to directly support discharges from hospital into the community, to support the NHS.

Schools

The core schools budget in England will receive £2.3 billion of additional funding in each of 2023-24 and 2024-25.

Infrastructure

During this Parliament there has been a step change in public investment in infrastructure. The Autumn Statement protects the public capital budget at record levels, meaning government will invest over £600 billion over the next five years.

Investing in high quality infrastructure is crucial for boosting economic growth and productivity. Infrastructure spreads opportunity and prosperity across communities by connecting people to new jobs through faster and more reliable routes. Infrastructure is also the foundation for securing our energy independence and transitioning to net zero.

The government will seek to accelerate delivery of projects across its infrastructure portfolio, rather than focus on the list of projects that were flagged for acceleration in the Growth Plan.

These include East West Rail, core Northern Powerhouse Rail, and High Speed 2 to Manchester.

It also remains committed to supporting digital infrastructure investment through Project Gigabit, with an ambition to reach at least 85% gigabit-capable broadband coverage by 2025 and nationwide coverage by 2030.

The UK’s energy will be secured through delivering new nuclear power, including Sizewell C (subject to final agreement), and the roll-out of cheap, clean renewables, including wind and solar. This will support the government’s commitment to reduce emissions, decarbonise the power system by 2035 (subject to security of supply) and reach net zero by 2050.

The government remains committed to levelling up and spreading opportunity across all areas of the UK. To support this, the Autumn Statement confirms that the second round of the Levelling Up Fund will allocate at least £1.7 billion to priority local infrastructure projects. Successful bids will be announced before the end of the year.

The Investment Zones programme will be refocused towards the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths.

The Department for Levelling Up, Housing and Communities will work closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards, with the first clusters to be announced in the coming months. The existing expressions of interest will therefore not be taken forward.

Questions?

If you have any questions about the announcements made today or need advice on how they affect your business get in touch.

We have tax advisors, accountant, R&D specialists and innovation funding experts ready to take your call.

Look out for further analysis from the team in the coming days.