Twists and turns
When the Chancellor of the Exchequer makes a fiscal statement
to Parliament - whether it is called a Budget, a mini-Budget or an Autumn Statement – the headlines are in the speech and the details are in the Treasury Red Book that is published on the internet when he sits down. In normal times, it is hard enough to keep track of changes that come in immediately, changes that are coming soon, and proposals that are on the horizon.
This year is not normal. There have been four Chancellors and three fiscal statements. The challenge following Jeremy Hunt’s first Autumn Statement
has been to identify what, if anything, of Kwasi Kwarteng’s proposals survived, as well
as understanding the steps he has taken to fill the holes in the government coffers that the ill-fated September ‘Plan for Growth’ helped to create. There has been a great deal of speculation about what Mr Hunt might do, and sometimes an awareness of what has not been said can be important too.
This document summarises the main changes that were announced by Mr Hunt, as well as setting out what has survived and what has been cancelled from the September plan, and points out some of the rumoured possibilities that have come to nothing. One of
Mr Hunt’s tax raising measures is a promise to freeze the main thresholds for income tax and inheritance tax for the next five years – that may be something of a relief after a year in which three different sets of National Insurance rates have applied, but the effects of inflation will draw more people into paying these taxes and more of them into liability for higher rates. There are also more obvious tax rises through reductions in reliefs and exemptions and a lowering of the point at which the top rate of income tax applies.
One of Mr Kwarteng’s proposals was the abolition of the Office of Tax Simplification.
He said that he would mandate every tax official to focus on simplification of the tax code. Sadly, it never seems to get any simpler. If you would like to discuss what these measures mean for your individual circumstances, we will be pleased to help.
Significant points
- Basic rate of income tax to remain at 20% and additional rate at 45% for 2023/24
- Most tax rate bands frozen at current levels until 5 April 2028
- 45% rate will apply to income above £125,140 in 2023/24
- Dividend income and capital gains to be more heavily taxed from 2023/24
- No changes announced to pension tax reliefs
- Inheritance tax thresholds also frozen until 5 April 2028
- Corporation tax rate increase to 25% from 1 April 2023 restored
- VAT registration threshold frozen at £85,000 for two more years, to 31 March 2026
- Affirmation of support for the state pension ‘triple lock’ with an inflation-linked increase from April 2023