There has been a lot of toing and froing with the basic rate of income tax – previously, the government announced that it would be cut from 20% to 19% from April 2024. This date was then changed to April 2023.
However, it has now been decided that this will remain at 20% until economic conditions allow it to drop.
During September’s Mini-budget, the government made the decision to abolish the 45% rate of income tax with a single higher rate of 40% in order to ‘incentivise enterprise and hard work and simplify the tax system’. However, this was another reversed decision and so not only will it remain at 45%, but the threshold will be reduced from £150,000 to £125,140 from April 2023.
Personal tax allowance (£12,570) and the higher rate threshold (£50,271) have been frozen until 2028.
National Living Wage / National Minimum Wage
Both the National Living Wage and National Minimum Wage will be increased from the 1st of April 2023.
These rates will be set at:
- £5.28 an hour for apprentices
- £5.28 an hour for 16-17-year-olds
- £7.49 an hour for 18-20-years-olds
- £10.18 an hour for 21-22-year-olds
- £10.42 an hour for those 23 years old and over
Another area that saw a reversal from the Mini-budget was dividends. The tax rates had changed and the additional rate was set to be abolished.
However, now the rates will remain as:
- Basic rate – 8.75%
- Upper rate – 33.75%
- Additional rate – 39.35%
From April 2023, the government will also reduce the dividend allowance from £2,000 to £1,000. This will then drop again to £500 from April 2024.
Capital Gains Tax
The capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024.
Vehicles / Fuel
From April 2025, electric cars, vans and motorcycles will need to start paying Vehicle Excise Duty so that all road users are paying a fair tax contribution as the number of electric vehicle users continues to grow.
The price of fuel is also set to rise with a 23% hike in fuel duty from March 2023 – this adds another 12p per litre tax on petrol and diesel.
Windfall tax on oil and gas companies will increase from 25% to 35% until 2028.
The Energy Price Guarantee (EPG) will be upheld throughout the winter months, limiting typical energy bills to £2,500 per year and from April 2023 this figure will rise to £3,000.
The current Energy Support package will be revised from April 2023.
What about IR35?
Unfortunately, despite promises made during the Mini-budget that IR35 rules were to be simplified, this is no longer the case.
It was part of the many U-turns that took place shortly after the announcement, and at the time, the Association of Independent Professionals (IPSE) slammed the government for such a ‘spineless’ decision.
It came as a great disappointment that the Autumn Statement did not include any positive changes to IR35.
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