The good, the bad and the ugly - Rundown of the Autumn Budget
Today’s Autumn Budget will mean a serious squeeze on cash flow for pretty much everyone across the UK will face eye watering tax increases, raising £24 billion of tax revenue, and similar savings to be made from cuts on public services.
A run down of tax measures announced today:
An expansion to the windfall tax from 25% to 35%
Freezing personal allowance thresholds until April 2028
Capital gains tax (CGT) allowance cut from £12,300 to £6,000
Freeze inheritance tax nil rate bands until 2027- 28
Revised the energy support package from April 2023
Dividend tax rate will be cut to £1,000
Electric car no longer exempt from vehicle excise duty
Freeze employer’s NI threshold until April 2028
VAT threshold maintained until March 2026
R&D relief for SMEs cut to 86% and the credit rate to 10%
SDLT cut will remain only until March 2025
Increasing the national living wage for over 23 year olds to £10.42
The good?
Employers National Insurance Contributions threshold is frozen until April 2028 & the Employment Allowance will be retained at its new, higher level of £5,000 until March 2026.
If you hire staff in your business, the back-and-forth to changes of your monthly PAYE taxes will now stabilise and remain at the current level until April 2028.
At the start of every new tax year, you will continue to receive £5,000 tax relief on these PAYE taxes and the April of each new tax year the tax relief is available until it is all used up before the PAYE taxes kick in.
The 45p income rate threshold is changing to £125,140 from April 2023 versus the current £150,000 threshold.
“Those who earn more must pay more”, and this change will mean those with income at this 45p rate will pay on average £1200 more per year.
Stamp duty cuts announced in the mini-budget will remain in place but only until 31st March 2025.
Kwasi Kwarteng made the following changes on 23rd September 2022 which will remain in place until March 2025:
Threshold for paying stamp duty in England and Northern Ireland is £250,000 (doubled)
First time buyer stamp duty threshold is £425,000 versus £300,000
First time buyers relief increase to £625,000, up from £500,000
Increase in windfall tax for energy firms
The Chancellor has confirmed that there will be an increase of the one-off levy on North Sea oil and gas producers from 25 per cent to 35 per cent.
The bad?
Maintaining freeze on the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years - to April 2028.
If you are employed, self employed, a landlord or subject to inheritance tax payments after a death of a loved one, you will see an increase in these tax bills until 2028. Many more people will also be impacted by these tax-free threshold freezes that otherwise would not have been if the thresholds increased year on year as they once used to.
From April 2025, electric car drivers will need to pay road tax and will see an increase to company taxes of 1% per year, for three years
There are now around 600,000 electric vehicles on the UK's roads which accounts for one in six new cars sold today. From April 2025 EV drivers will need to pay road tax and those who have a company electric car, will see their tax rate increase from this date by 1% every year for three years.
The Ugly?
Dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.
Business owners of all sizes, but particularly small businesses and family run businesses, will feel this one. The amount of profit you can extract from your company tax free after paying your business corporation tax will reduce down to a mere £500 from April 2024, currently set at £2,000 per year.
The Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.
Sell anything worth more than £6,000 in the UK, you have to report this to HMRC and currently if you make profit of up to £12,300 per tax year, there is no capital gains tax liability. However, from April 2024 this will reduce to £3,000 - a major drop in the threshold - which will see many, many more people having to both report and pay tax if they sell an asset, including property and jewellery.
