The Autumn Statement was delivered on 17 November 2022 by the Chancellor and in summary these are the major taxation announcements:
- The Personal Allowance ie. threshold that one starts paying tax, £12,570 is frozen until April 2028. Anyone who earns more than this will pay income tax. (This allowance is reduced by £1 for every £2 earned between £100,000 and £124,140)
- People will continue to pay basic rate tax (20%) on their earnings from £12,571 to £50,270 and again this is frozen at 20%
- With effect from 6 April 2023 the higher rate (40%) will be levied at £50,271 to £125,140 rather than in the current tax year to 5 April 2023 higher rate tax is paid on one’s earnings from £50,271 to £150,000.
- The additional rate tax (45%) currently levied on earnings over £150,000 to 5 April 2023 will be levied with effect from 6 April 2023 on earnings over £125,140.
(Please note that Scotland sets its own bands and rates and so these income tax levels apply to England, Wales, and Northern Ireland)
Income Tax is paid on salaries, profits from self-employment, some benefits such as medical expenses, pensions, rental income.
Dividends are paid to shareholders of companies and are normally paid out of a company’s profits upon which corporation tax has already been paid.
Shareholders are allowed to take dividends of £2,000 tax free in the current financial year which will be reduced to £1,000 per annum with effect from 6 April 2023 and then to £500 with effect from 6 April 2024.
The threshold of £325,000 at which people start to pay Inheritance tax will be frozen.
The annual exemption before one starts to pay Capital Gains Tax of £12,300 in the current year to 5 April 2023 will be reduced to £6,000 per annum with effect from 6 April 2023 and then to £3,000 with effect from 6 April 2024.
The Chancellor also announced that the cut to Stamp Duty announced in September in England and Northern Ireland for some house buyers would be permanent. However, in the Autumn Statement it was announced that the cuts would be reversed at the end of March 2025.
Stamp Duty is currently levied on purchases by house buyers to £250,000 (£425,000 for first time buyers) and discounted stamp duty for first time buyers applied to properties up to the value of £625,000
The Chancellor also announced that Electric Vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
With the end of the current financial year for income tax purposes to 5 April 2023 and some of the changes mentioned above will be implemented with effect from 6 April 2023 it is definitely time to start thinking about doing some tax planning. Please get in touch here at Nockolds on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.