Autumn Statement 2022 A Very Brief Overview

Further information can be found here: Autumn Statement 2022: documents - GOV.UK (www.gov.uk)

A summary of the Tax Changes are as follows:

Income tax additional rate threshold - The income tax additional rate threshold (ART) will be lowered from £150,000 to £125,140 from 6 April 2023. The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. The ART for savings and dividend income will apply UK-wide.

Dividend Allowance and Capital Gains Tax Annual Exempt Amount - The government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023, and to £500 from April 2024, and reduce the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and down to £3,000 from April 2024. The intention is for these measures to raise over £1.2 billion a year, from April 2025. The exempt amount for CGT in Trusts is not mentioned in the Autumn Statement 2022.

Preventing Capital Gains Tax avoidance - To address tax avoidance, the government will legislate in the Spring Finance Bill 2023 so that shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK. This will have effect where an individual has a material interest in both the UK and the non‑UK company and where the share exchange is carried out on or after 17 November 2022. Draft legislation and supporting documents will be published alongside the Autumn Statement

Inheritance Tax nil-rate band and residence nil-rate band - The inheritance tax nil-rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further 2 years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.

Corporation Tax - As previously confirmed, the planned increase in the Corporation Tax rate to 25% for companies with over £250,000 in profits will go ahead.

Stamp Duty Land Tax cuts - On 23 September 2022, the government increased the nil-rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000. The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction. The SDLT cut will remain in place until 31 March 2025.

Maintaining the VAT registration and deregistration thresholds at the current levels for an additional 2 years - The VAT registration and deregistration thresholds will not change for a further period of 2 years from 1 April 2024. At £85,000, the UK’s VAT registration threshold is more than twice as high as the EU and OECD averages.

National Insurance contribution rates and thresholds for 2023-24 - The government will fix the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) at 2022-23 levels in 2023-24. The LEL will remain at £6,396 per annum (£123 per week) and the SPT will remain at £6,725 per annum. The Upper Secondary Threshold, Apprentices Upper Secondary Threshold, and Veteran Upper Secondary Threshold, will stay fixed at £50,270 per annum until April 2028, to remain aligned with the UEL and UPL. The Freeport Upper Secondary Threshold will also be fixed at £25,000 per annum. The government will use the September CPI figure of 10.1% to uprate the Class 2 and Class 3 NICs rates for 2023-24. The Class 2 rate will be £3.45 per week, and the Class 3 rate will be £17.45 per week. The government will legislate for these measures in affirmative secondary legislation in early 2023.

Married Couples’ Allowance and Blind Persons Allowance - The government will uprate the Married Couple’s Allowance and Blind Person’s Allowance by the September CPI figure of 10.1% for the 2023-24 tax year. The Married Couple’s Allowance will be valued at between £4,010 and £10,375 and the Blind Person’s Allowance will be valued at £2,870.

Council Tax flexibility - The government is giving local authorities in England additional flexibility in setting council tax by increasing the referendum limit for increases in council tax to 3% per year from April 2023. In addition, local authorities with social care responsibilities will be able to increase the adult social care precept by up to 2% per year.

Tax Evasion/OECD Pillar 2 - The government will introduce measures to tackle tax avoidance, evasion, and wider non-compliance and implement the OECD Pillar 2 rules for a global minimum corporate tax rate, for accounting periods beginning on or after 31 December 2023.

Additional Compliance Resource for HMRC - The government is investing a further £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers. This investment is forecast to bring in £725 million of additional tax revenues over the next 5 years. The government remains committed to ensuring HMRC has sufficient funding to enable it to maintain its compliance performance over time, while continuing to make efficiencies, both in this and future Spending Review periods.  We hope that HMRC will put more telephone operators in place with the additional funding!

OECD Pillar 2 - Following consultation, the government will legislate to implement the globally agreed G20-OECD Inclusive Framework Pillar 2 framework in the UK.

For accounting periods beginning on or after 31 December 2023 the government will:

• Introduce an Income Inclusion Rule (IIR) which will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%
• Introduce a supplementary Qualified Domestic Minimum Top-up (QDMTT) tax rule which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%

Both the IIR and QDMTT will incorporate the substance based income exclusion that formed part of the G20-OECD agreement. This will be legislated for in Spring Finance Bill 2023.

The government intends to implement the backstop Undertaxed Profits Rule in the UK, but with effect no earlier than accounting periods beginning on or after 31 December 2024.

Reforms to Research and Development (R&D) tax reliefs - For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

There are further details about Energy, Pensions, Electric Vehicles and Business Rates etc in Chapter 5 Policy Decisions of the Autumn Statement 2022