Autumn Statement November 2022

The basic rate of income tax is to remain at 20%. Previously it had been announced that the basic rate of tax would reduce down to 19% but this has now been scrapped indefinitely.

The additional rate of tax is to remain at 45%. Previously this rate of tax was to be scrapped completely.

The personal allowance is to remain at £12,570 until April 2028.

The higher rate tax threshold is to remain at £50,270 until April 2028.

The additional tax rate will be payable on earnings over £125,140 from April 2023. The current threshold is £150,000 for tax year 2022/23.

NOTE: At an inflation rate of just 2% the personal allowance should be £15,470 by 2027/28. The freezing of the tax allowances for a further 6 years will have the effect of taxing many more individuals. Even more so, if inflation remains at its current double digit levels.

The dividend allowance is the tax free amount that an individual can receive before tax is payable.

In the current tax year 2022/23 this allowance is £2,000. From April 2023 this will reduce to £1,000 and from April 2024 to £500.

See our further information on the dividend allowance and how dividends are taxed.

TAX TIP: You do not pay tax on dividends from shares that are held in an ISA. Any individual that receives dividends over £500, should consider transferring the shares into an ISA, so that this income becomes tax free.

The reduction of 1.25% in dividend tax rates has now been scrapped. The dividend rates from April 2023 will be:

8.75% tax rate payable by basic rate taxpayers.
33.75% tax rate payable by higher rate taxpayers.
39.35% tax rate payable by additional rate taxpayers.

The Government had intended to increase National Insurance Rates by 1.25% in the current tax year 2022/23. This would be reversed from April 2023 and a new Health and Social Care Levy of 1.25% was to be introduced.

It has been announced that the National Insurance rate increase of 1.25% and the social care levy of 1.25% are both now cancelled.

The National Insurance rates will revert back to the previous rates in tax year 2021/22. Namely 12.0% for employees and 13.8% for employers.

The National Insurance thresholds are also to be frozen at the current levels until April 2028.

The freezing of the threshold will increase the cost to employers. However, 40% of businesses will continue to pay no Employers National Insurance as the allowance of £5,000 remains available.

For the full rates see HMRC website.

The annual exemption for capital gains tax in the current tax year 2022/23 is £12,300.

From April 2023 this will reduce to £6,000.

From April 2024 this will reduce to £3,000.

Reducing the exemption to just £3,000 will mean that even the smallest shareholders may have capital gains tax to pay. This will increase the burden on HMRC as more taxpayers will be required to complete an annual tax return.

TAX TIP: Consider crystallising any capital gains liabilities now rather than waiting until next tax year.

The minimum wage will be £10.42 per hour from April 2023. This is payable to employees aged 23 or over. This is an increase from the current hourly rate of £9.50 in tax year 2022/23.

For details of other age groups see blog National Minimum Wage from April 2023.

The corporation tax rate is to increase from the current rate of 19% to 25% for companies with profits over £250,000.

Companies with profits under £50,000 will pay tax at the current rate of 19%.

A marginal rate of tax is charged for profits between £50,000 and £250,000.

Use our Corporation Tax Calculator to see how much extra tax your company will pay.

Businesses investing up to £1 million can claim the annual investment allowance. This will remain the same for 2023 and beyond.

The limit had been expected to reduce to £200,000 from April 2023 but the £1 million will now remain in place.