Chancellor announces tax increases
What key changes did Chancellor Jeremy Hunt announce in today's Autumn Statement?
Income tax
The Chancellor was quick to point out that there are no increases to the headline rates of tax. However, this does not mean that individuals won’t pay more income tax, quite the opposite in fact. The threshold at which the 45% rate of income tax kicks in will be reduced from £150,000 to £125,140 from April 2023. The personal allowance will remain at the current level until April 2028. As wages are increasing, albeit at a lower rate than inflation, this means that some low earners will start to pay income tax. The freeze on the threshold at which the 40% rate of tax is paid has also been extended by two years – to 2028. The tax-free dividend allowance will be cut to £1,000 from April 2023 then to £500 the following year.
National Insurance
The employment allowance will remain at the current level of £5,000. The main NI thresholds will also be held at the current level until April 2028.
Capital gains tax (CGT)
There is no change to the CGT rates, but the annual exempt amount will be cut from £12,300 to £6,000 in April 2023, and then to £3,000 the following year.
Other announcements
- The increase in SDLT allowances announced at the mini-Budget will be retained – but only until 31 March 2025.
- The nil rate band which is the amount an individual can leave tax free on death, will be frozen at £325,000 for a further two years – until 2028.
- Electric Vehicles will no longer be exempt from vehicle excise duty from April 2025.
- The Energy profits levy will increase to 35% from 25% and extended from four years to six years.
- National Living wage to increase to £10.42 per hour from 1 April next year.
Related Topics
-
Increase the IHT-free part of your estate by 50%
Your father died leaving his entire estate to your mother who later remarried. You’ll inherit some or all of her estate depending on whether she dies before her husband. What steps can be taken to reduce the inheritance tax (IHT) on the estate?
-
How much will you save with reduced scale charges?
HMRC has reduced the VAT fuel scale charge by nearly 6% for company-provided cars. When does the new reduced rate take effect and how do you make the calculations?
-
Avoid the trading allowance trap
In late 2024 you became self-employed. You’re now completing your tax return for 2024/25 and will claim the trading allowance instead of a tax deduction for business expenses. Could this impact your NI record and state pension entitlement?