Autumn Statement 2022

18 Nov Autumn Statement 2022

The Chancellor’s Autumn Statement, given on 17 November 2022, included a number of tax measures aimed at improving the government’s finances – although there were no increases to the main rates of tax, reductions to various tax bands and allowances were announced and an extension to the period for which many allowances and bands have been frozen.

The Autumn Statement set out further steps on taxation and spending, with the intention that each contributes in a broadly balanced way to repairing the public finances, while protecting the most vulnerable.

In this article, we have summarised the main elements of the Autumn Statement that are relevant to the financial planning world.

TAXATION

Additional rate tax threshold
From 6 April 2023, additional rate tax will apply to income above £125,140 rather than the current £150,000. The new threshold of £125,140 ties in with the income figure at which the personal allowance is completely lost.

Tax and national insurance thresholds
Apart from the additional rate threshold change outlined above, all other income tax, inheritance tax and national insurance thresholds and allowances will be frozen until April 2028 (they had already been frozen to April 2026 so this measure extends this by another 2 years).

Dividend allowance
Currently set at £2,000 pa this will reduce as shown below:

• To £1,000 from April 2023
• To £500 from April 2024

 
Capital gains tax annual exempt amount
Currently set at £12,300 pa this will reduce as shown below:

• To £6,000 from April 2023
• To £3,000 from April 2024

 
Stamp duty land tax (SDLT)
The cuts to SDLT that took effect from 23 September this year (shown below) will end on 31 March 2025.

The level at which people begin paying Stamp Duty Land Tax (SDLT) was increased on 23 September from £125,000 to £250,000.

For first-time buyers the level at which they begin paying stamp duty has been increased from £300,000 to £425,000.

In addition, the government is allowing first-time buyers to access the relief when they buy a property costing less than £625,000 rather than the current £500,000.

Employment allowance
Will remain at £5,000.

PENSIONS

State Pension Age review
Details will be published early in 2023.

Pension triple lock will apply in April 2023
Meaning that the state pension will increase by inflation of 10.1% in April. A full weekly basic State Pension will increase from £141.85 to £156.20, and the new weekly State Pension will increase from £185.15 to £203.85.

STATE BENEFITS AND SUPPORT

Energy Price Guarantee
This currently fixes the cost of energy so that a ‘typical’ household pays the equivalent of £2,500 on their energy bills a year.

From April 2023, this will change so that the typical household will then pay on average £3,000 a year.

Pension Credit
Will increase by 10.1% in April (i.e. the September 2022 annual CPI rate).

Cost of living payments
Will continue in 2023 at the rates below:

• £900 for those on means-tested benefits (paid in instalments)
• £300 for pensioners
• £150 for those on disability benefits

 
Benefits uprating
In April 2023, benefits will increase in line with inflation, i.e. by September 2022 CPI inflation of 10.1%.

Benefit cap rise
In April 2023, the government will also increase the benefit cap in line with inflation by 10.1%. The benefit cap will rise from £23,000 to £25,323 for families in Greater London and from £20,000 to £22,020 for families nationally.

Lower caps for single households without children will rise from £15,410 to £16,967 in Greater London and from £13,400 to £14,753 nationally.

Household Support Fund extension
The Government is providing an extra £1 billion of funding to enable the extension of the Household Support Fund in England for a further year from April 2023.

These payments will be made on a UK-wide basis to Local Authorities. Those in need can access the fund by contacting their local Council. The money can be used to cover the cost of essentials like food, energy and water bills.

National Living Wage
From 1 April 2023, the National Living Wage (NLW) will increase by 9.7% to £10.42 an hour for workers aged 23 and over.

Young people and apprentices on the National Minimum Wage (NMW) rates will also see a boost to their wages. Rates will be increased for people aged 21-22 by 10.9% to £10.18 an hour, for those aged 18-20 by 9.7% to £7.49 an hour, for 16-17 year olds by 9.7% to £5.28 an hour, and for Apprentices by 9.7% to £5.28 an hour.

SOCIAL CARE
The Dilnot reforms, including the introduction of the £86,000 cap on care fees, which were due to be introduced in October 2023, have been postponed for two years.

The views expressed are not to be taken as financial advice. Professional advice should be sought before proceeding.