Autumn Statement 2022 - what it means for you

Jeremy Hunt used the Autumn Statement in an attempt to calm markets and reset public finances with a series of tax rises achieved through cuts and freezes to allowances. These measures amplify the need for you to make the most of annual tax allowances and maximise tax-efficient savings into pensions and ISAs. Read our summary of the key points below:

Income Tax & Dividends

• Income tax rates for 2023/24 will remain at the basic, higher, and additional rates of 20%, 40%, and 45% respectively. The abolition of the additional rate of tax announced in the Mini Budget will not happen.

• The Scottish Government intends to hold its own Budget on 15 December, and this will determine the rates which will apply to Scottish taxpayers.

• The point at which additional rate tax becomes payable will be cut from £150,000 to £125,140 from 6 April 2023. This will mean that those already paying tax at 45% will pay an extra £1,243 in 2023/24. The Government forecast that approximately 250,000 individuals will pay some extra tax due to this measure.

• The personal allowance and basic rate band remain frozen at £12,570 and £37,700 respectively. This freeze of allowances has been extended by a further two years until April 2028. This means that the higher rate tax threshold will remain at £50,270 for those entitled to a full personal allowance.

• The dividend allowance is to be halved from £2,000 to £1,000 for 2023/24, and halved again to £500 for 2024/25. Consequently, many more investors will need to complete tax returns if their dividend income exceeds £1,000 next year. The dividend tax rates for basic rate, higher rate, and additional rate taxpayers will remain at 8.75%, 33.75%, and 39.35% for both the current tax year and 2023/24. The 1.25% increase installed from the start of 2022/23 will not be reversed.

Pensions

• There were no changes announced to pension tax relief. However, the reduction of the threshold for additional rate tax to £125,140 will see more high earners benefit from relief at 45% on their pension savings.

• It was confirmed that the triple lock on the State Pension would be maintained, guaranteeing the 10.1% CPI-based increase for next April along with the same level of increase to the Pension Credit.

• There was no mention of any extension to the freeze to the lifetime allowance which is expected to remain fixed at £1,073,100 until April 2026.

National Insurance

• The increase to NI to help pay for social care reforms has been scrapped. The additional 1.25% which was added to the rates of NI for 2022/23 for employees, employers, and the self-employed, has been removed from November 2022. 

• NI thresholds will be fixed at the current 2022/23 levels. The changes to the thresholds at which individuals (both employed and self-employed) start to pay NI, which were introduced in July 2022, will remain - i.e. they're kept in line with the annual personal allowance of £12,570.

Capital Gains Tax

• The chancellor announced that the CGT annual exemption would be cut from £12,300 to £6,000 from April 2023, and to £3,000 from April 2024. Based on 2021/22 figures an estimated extra 235,000 individuals will need to file a self-assessment return in 2023/24 as a consequence.

• There was no change to the rates of CGT and these will continue to be 10% and 20% (18% and 28% respectively for gains on residential property).

Inheritance Tax

• The freeze on both the nil rate band (NRB) and residence nil rate band (RNRB) has been extended for an additional two years. The NRB will remain at £325,000 and the RNRB at £175,000 until April 2028.

Corporation Tax

• Corporation tax will rise to 25% from April 2023 as originally planned. However, small companies with profits below £50,000 will continue to pay at the current rate of 19%. There will also be a reintroduction of tapering relief for businesses with profits between £50,000 and £250,000 so that they pay less than the main rate.