The Autumn Budget 2022

Income Tax

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

Dividends

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.

Energy

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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