Posted by The Outsider on 18/11/2022, 20:10:41
I know for most this will be boring but, if anyone is interested, this is a report that I have just sent to clients. |
As you are probably aware, the Chancellor made his Autumn Statement yesterday. Whilst, technically, it was not a Budget Statement, it contained many announcements that would normally be part of a Budget Statement. Unfortunately, the amount of information available from HM Revenue & Customs and HM Treasury is considerably less than for a normal Budget Statement. Also, there are several items where it says that details will be announced in December. I assume that there will be a Spring Budget Statement early next year, after which more detailed information will be made available. If so, I will prepare the normal Budget Report at that time.
Below are some brief details about various changes that were announced yesterday. In some cases, the information may be different for the devolved nations.
INCOME TAX RATES
There are no changes to the rates which remain at 20 per cent, 40 per cent and 45 per cent.
The Personal Allowance will now remain at £12570 until 5 April 2028. This means that the amount available for a Marriage Allowance Transfer, for those who are eligible, remains at £1260.
The Married Couple’s Allowance, which is only available where at least one of the couple was born before 6 April 1935, is to increase for 2023/24. The minimum allowance will be £4010 (£3640 in 2022/23) and the maximum will be £10375 (£9415 in 2022/23). The amount due depends on the income for the year.
The Blind Person’s Allowance increases from £2600 in 2022/23 to £2870 in 2023/24.
The level at which 40 per cent tax starts to be payable will remain at £50270 (Personal Allowance of £12570 plus basic rate band of £37700) until 5 April 2028. As from 6 April 2023, the level at which 45 per cent tax starts will be reduced from £150000 to £125140. Several places, including the front page of today’s Financial Times, are reporting that the threshold will be £125000. Whilst this may seem a more logical figure, there is a good reason why the new threshold is £125140. Once income reaches £100000, any additional income leads to the Personal Allowance being reduced by £1 for every £2 of income above £100000. As the Personal Allowance is £12570, it is reduced to nil when income reaches £125140 (£100000 plus 2 x £12570).
PERSONAL SAVINGS ALLOWANCE
Anyone who is a basic rate (20 per cent) taxpayer can receive up to £1000 interest (excluding interest on ISAs) without paying tax on it. A higher rate (40 per cent) taxpayer can receive up to £500 interest (excluding interest on ISAs) without paying tax. A consequence of the change in the additional rate (45 per cent) threshold is that anyone with income over £125140 will receive no Personal Savings Allowance so will pay tax on all interest (excluding interest on ISAs).
Currently, a taxpayer can receive up to £2000 in dividends without paying tax on them. This allowance will reduce to £1000 from 6 April 2023 and to £500 from 6 April 2024.
VEHICLE BENEFITS IN KIND
The rates for benefit in kind charges on company cars for each tax year until 5 April 2028 will be announced in the Autumn Finance Bill. This is intended to provide long term certainty when making decisions about purchasing vehicles.
The percentages applicable to electric and low emission cars will increase by 1 per cent in each of the 2025/26, 2026/27 and 2027/28 tax years up to a maximum of 5 per cent for electric cars and 21 per cent for low emission cars.
The rates for all other vehicle bands will increase by 1 per cent in 2025/26, subject to a maximum rate of 37 per cent, and will then remain at that level in 2026/27 and 2027/28.
The benefit in kind charge for vans and the car and van fuel benefit charges will be announced in December 2022.
NATIONAL INSURANCE CONTRIBUTIONS
Thresholds and rates for both employees (between £12570 and £50270) and employers (above £9100 with no upper limit) are to remain at current levels until 5 April 2028. Anyone earning between £6396 and £12570 will be liable to National Insurance Contributions, albeit at 0 per cent. This is to protect any benefits, the entitlement to which is based on the payment of National Insurance Contributions. Contributions payable by directors are based on these annual figures but, for employees, they are converted to weekly or monthly figures, as appropriate, so there could be a liability in some pay periods even if the annual limits are not reached.
As previously announced, the Health and Social Care Levy of 1.25 per cent was cancelled with effect from 6 November 2022 so the rates for employees and employers will be 12 per cent and 13.8 per cent, respectively.
Class 2 contributions will increase from £3.15 per week in 2022/23 to £3.45 per week in 2023/24. These contributions are payable where profits exceed £12570 although, where profits are between £6725 and £12570, National Insurance credits will still be given.
Class 3 contributions will increase from £15.85 per week in 2022/23 to £17.45 per week in 2023/24.
Class 4 contributions at 9 per cent will be due in 2023/24 on profits between £12570 and £50270. These levels will be frozen until 5 April 2028. A reduced rate of 2 per cent is payable on profits above £50270.
The maximum that can be claimed will remain at £5000 per year.
From 1 April 2023, the rate will increase to 25 per cent on profits above £250000. The Small Companies Rate for companies with profits of up to £50000 will remain at the current rate of 19 per cent. There will be a tapered rate for companies with profits between £50000 and £250000.
CAPITAL GAINS TAX
As from 6 April 2023, the Annual Exempt Amount will reduce from the current £12300 to £6000 and this will reduce to £3000 from 6 April 2024.
The nil-rate threshold will remain frozen at £325000 until 5 April 2028 and the additional exemption where a qualifying residence is left to a direct descendant will remain at £175000 until that date.
VALUE ADDED TAX
The registration and deregistration thresholds will remain at £85000 and £83000, respectively, until 31 March 2026.
INDIVIDUAL SAVINGS ACCOUNTS
The maximum amount that an individual can contribute to an ISA during the year ending 5 April 2024 is to remain at £20000.
PENSIONS TAX RELIEF
The Lifetime Allowance will remain at £1073100 until 5 April 2026.
STAMP DUTY LAND TAX
In the “Mini Budget” on 23 September 2022, the Stamp Duty Land Tax nil-rate threshold was increased from £125000 to £250000 and from £300000 to £425000 for first time buyers. The maximum purchase price for which First Time Buyers’ Relief could be claimed was increased from £500000 to £625000. These changes will end on 31 March 2025 at which point the previous figures will apply again.
NATIONAL LIVING WAGE AND NATIONAL MINIMUM WAGE
Increases to the National Living Wage and National Minimum Wage will come into force from 1 April 2023. The standard hourly rate for those aged 23 and over will increase from £9.50 to £10.42. For those aged 21 to 22 the hourly rate will increase from £9.18 to £10.18, for those aged 18 to 20 the hourly rate increases from £6.83 to £7.49 and for those aged 16 to 17 the hourly rate increases from £4.81 to £5.28.
Business rates will be based on updated property values from 1 April 2023. In some cases, the increased valuation will lead to a liability to business rates where Small Business Rates Relief had previously meant that no payment was due. This liability can be quite large but a Support Small Business Scheme is to be introduced which will cap the increase for small businesses who are losing some or all eligibility for Small Business Rates Relief or Rural Rate Relief to a maximum of £600 per year over the next three years.
Support for eligible retail, hospitality and leisure businesses is to be extended and increased. Qualifying businesses received a 50 per cent discount for the year ending 31 March 2023. The discount for the year ending 31 March 2024 will be 75 per cent. This discount is subject to a cap of £110000 per business.
This report has been prepared for information purposes only and solely for the use of clients of this firm. Whilst every care has been taken in preparing this report, we are unable to accept any responsibility for any losses which might occur as a result of any errors being included in this report. Changes in detail may occur in the Finance Bill and further changes may occur during the progress of the Bill through Parliament. Before any client considers any action, based on the above information, we would strongly recommend that they contact us for specific advice.