Autumn Statement 2022

Recently the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Autumn Statement 2022 speech.

Please see below a summary of the key points and please do not hesitate to contact us if you have any queries regarding how these matters may affect you.

Income Tax bands frozen until April 2028

Income tax rates and personal allowances will remain at the same level until at least April 2028.

The personal allowance will remain at £12,570 and the higher rate threshold will remain at £50,270.

Meanwhile, the threshold at which people start paying the top 45p rate of Income tax will be reduced from £150,000 to £125,140 from 6th April 2023.

National Insurance thresholds and rates

National Insurance thresholds will be frozen until April 2028.

From 6th April 2022 to 5th November 2022, the National Insurance rates included a 1.25% increase. From 6th November 2022 to 5th April 2023, most employees will pay 12% on earnings between the primary threshold and the upper earnings limit. Employers will pay 13.8% towards employees’ National Insurance on earnings above the secondary threshold.

Capital Gains and Dividend Allowances

The Dividend allowance will reduce to £1,000, while the Capital Gains Allowance will reduce to £6,000 per year from April 2023.

The Dividend allowance will reduce to £500 from April 2024, while the Capital Gains Allowance will reduce to £3,000 per year.

Dividend tax rate

From April 2022, the government implemented a 1.25% rise in tax on dividends to help fund social care. Therefore for 2022/23, basic rate taxpayers will pay 8.75% on dividends above the allowance, while higher rate taxpayers will pay 33.75%. Anyone in the additional rate tax band will pay 39.35%.

Corporation Tax

There has been confirmation of the increase in Corporation Tax main rate to 25% from April 2023.

Companies with less than £50,000 of profit will not see any increase at all, continuing to pay Corporation Tax at 19%.

Companies whose profits fall between the lower (£50,000) and upper (£250,000) profits limits will pay corporation tax at the main rate, reduced by marginal relief. This provides a gradual increase in the rate of corporation tax as profits increase until the main rate of 25% is payable once profits reach the upper profits limit.