In the last few days there has been considerable speculation that the Chancellor would announce substantial tax hikes, however, in retrospect perhaps it is unsurprising – given the adverse market reaction to the mini-Budget in September – that there were no real surprises in today's Autumn Statement. Most of the tax announcements, in particular the freezing of various allowances and thresholds, had been leaked. Those that had not been trailed included cuts to the capital gains tax and dividend allowances. The lack of tax rate rises may be designed to ensure that any early signs of growth in the economy are not supressed. It is important to note that there are no changes to the rates of capital gains tax or stamp duty land tax. There was also no mention of the non-UK domiciled regime; however, given Labour's repeated promises to address the perceived unfairness of that regime, it is safe to assume that this issue is not off the agenda in the longer term.
The key points of note for individuals are set out below.
- The income tax personal allowance is to remain frozen at its current level of £12,570 for a further 2 years until 6 April 2028 (it was already due to be frozen at its current level until 6 April 2026).
- The higher rate tax threshold is also to be frozen at £50,270 for a further 2 years until 6 April 2028.
- The threshold for the 45% additional rate of income tax (currently £150,000) is to be reduced to £125,140 from April 2023.
- The dividend allowance is to be cut from £2,000 to £1,000 from April 2023, and then cut further to £500 from April 20204 – but there is no change in the rates of tax on dividends.
- No changes were made to pensions tax relief.
Capital gains tax (CGT)
- No increase in the rates of CGT was announced – so the rates of CGT remain at 10% for basic rate taxpayers and 20% for higher rate and additional rate taxpayers other than on gains on residential property and carried interest which remain subject to CGT at 28%.
- The CGT annual exempt amount is to be cut from £12,300 to £6,000 from April 2023 and then cut further to £3,000 from April 2024.
- A new anti-avoidance provision will be introduced in 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.
Inheritance tax (IHT)
- The IHT nil rate band is frozen at its current level of £325,000 for a further 2 years until 6 April 2028.
- No changes to IHT reliefs on business property or agricultural property were announced.
Stamp duty land tax (SDLT)
- The SDLT cuts announced in the mini-budget in September 2022 will remain in place but only until 31 March 2025 – so the first £250,000 of the purchase price of a first home by a UK resident will continue to be subject to SDLT at 0%.