Jeremy Hunt announced a range of tax hikes and spending cuts as part of his plan to try and get the country’s debt-to-GDP ratio under control by the middle of the decade.
The overall package of tax hikes and spending cuts are designed to raise £55bn for the public purse.
We will cover:
- The Autumn Statement changes to UK tax
Tax bands frozen
- The biggest change, and the one that will impact most people, is the freezing of tax allowances.
- Income Tax and National Insurance thresholds are set at £12,570.
- This threshold has already been frozen for four years to April 2026.
- This will now be stretched to April 2028.
- The 45p threshold for higher rate payers earning above £150,000 has also been reduced to £125,140 – hitting the most wealthy workers.
- More people will also pay Inheritance Tax after changes today by Mr. Hunt.
- Inheritance Tax is a 40% tax applied after a person dies to estates that are worth over £325,000.
- Today Mr. Hunt froze inheritance tax bands from 2025/26 to 2027/28.
- The change means more and more people will be due to pay the tax as inflation rises.
Council tax increase: Millions set for rise of up to 5%
- Mr. Hunt’s move will allow local authorities to increase households’ council tax bills without the permission of residents, in a bid to ease pressure on social care and other stretched local services.
- Average Band D council tax bills are already £1,966, and are set to rise above £2,000 for the first time in April after today’s announced increase.
Electric cars will now have to pay road tax
- Jeremy Hunt confirmed green cars will no longer be exempt from paying road taxes from April 2025.
National living wage and state pension set for ‘largest ever increases’
- The national living wage for those over 23 will be raised from £9.50 to £10.42. The 9.7 per cent increase will come into force in April 2023. That means that from April , the hourly rate will be £10.42 which represents an annual pay rise worth over £1,600 to a full-time worker.
- Universal Credit to get pay rise of £600 next year, state pension and other benefits will increase in line with inflation.
New cost of living payment: cost of living support with £900 payments for the most vulnerable
- People on benefits will get a share of £900, while pensioners will receive £300 and those on disability benefits £150 to help pay bills when the energy support for all runs out in April.
- The energy price guarantee will be less generous from April, but there will still be universal support, with the Government limiting energy bills at a higher level of £3,000 per year for the average household for a period of 12 months.
- The cap has been increased from the current level of £2,500, meaning households will still be paying more than they are at the moment.
Capital gains and dividends tax changes
- The annual tax-free dividend allowance will be reduced from £2,000 to £1,000 for the 2023/24 tax year, and will be reduced again to £500 in the 2024/25.
Capital gains tax
- The annual CGT allowance, which is the amount of profit you can make from the sale of an asset before you are taxed, has been halved for 2023-24 and halved again for the following tax year.
- UK hits power firms with windfall tax, hikes oil company levy.
- The levy on oil and gas companies would be increased to 35% from its current rate of 25% and extended until the end of March 2028.
Stamp duty cut to end in 2025
- People buying properties will pay more stamp duty from March 31, 2025.
Changes to R&D
From 1st April 2023
- SME enhancement rate reduced from 130% to 86%
- Payable credit rate reduced from 14.5% to 10%
- A loss making SME spending £100 on qualifying R&D
- Payable credit will decrease from £18.85 to £8.60
- An SME making more than £250k profit spending £100
- R&D related tax saving will decrease from £24.70 to £21.50
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