National Living Wage:
Increasing to £10.42/hour from April 2023 for over 23-year-olds.
Pensions and Benefits:
Much to the delight of everyone in the house, the Chancellor confirmed that the Pension triple lock would remain, meaning a 10.1% increase to pensions from April 2023. He went on to announce that other means tested benefits would also be increased in line with inflation.
There were announcements around extending funding for the NHS and education sectors, and a great speech about the UK’s plans for scientific and technological innovation, the Chancellor announcing that he wants the UK to be the “New Silicon Valley”.
The Chancellor announced a revaluation of business properties in 2023 but stated that there would be a package of targeted support to help with business rates costs, worth £13.6bn over the next 5 years.
Business rates multipliers will be frozen in 2023-24 and upward transitional relief caps will provide support to ratepayers facing larger bill increases following revaluation.
Relief for the retail, hospitality and leisure sectors will be extended and increased, and there will be “additional support” for small businesses. We have not been told what additional support there will be.
Energy Price Guarantee (EPG)
This will be maintained at £2,500 throughout the winter but will increase to £3,000 from April 2023, Additionally, cost of living payments will continue to be paid to the most vulnerable.
Income Tax and National Insurance
The Income Tax Additional Rate threshold will be reduced from £150,000 to £125,140, presumably from April 2023.
Other Income Tax thresholds, including Inheritance Tax thresholds, will remain frozen at their current level until April 2024, as will employee and self-employed National Insurance thresholds.
National Insurance for employers – the NIC secondary threshold, over which employer NIC kicks in, will remain at £9,100 until April 2028. It was originally frozen until April 2026.
Capital Gain Tax
The Capital Gains Tax exemption limit will be reduced over 2 years, to £6,000 from April 2023, and then £3,000 from April 2024.
The current Tax exemption limit of £12,300 is still in place until 5th April 2023.
VAT (Value added tax)
No change in the VAT threshold or VAT standard.
The Chancellor made reference to the UK VAT threshold being the lowest in Europe, but then went on to say that it would remain at its current level until March 2026.
R&D (Research and Development)
R&D relief for small and medium entities (SME’s) to be cut to 86%, and R&D credit rate to be cut to 10%, both from April 2023. The government has pledged to protect £20bn in R&D investments in 2024-25 but is also intent on reforming the R&D system to ensure that public money is spent effectively and best supports innovation. The Chancellor also announced that there would be more check on R&D claims, in an effort to identify those that are excessive or fraudulent.
Stamp Duty Land Tax (SDLT)
The temporary reduction in the SDLT threshold will remain in place until March 2025.
From April 2025 electric cars will no longer be exempt from Vehicle Excise Duty.
Those of our clients who operate through a Limited company will be impacted by the reduction in the tax-free dividend allowance, down from the current £2,000 per annum, to £1,000 in 2023-24 and then a further reduction to £500 in 2024-25.
It is feared that this has all the hallmarks of the start of a complete phasing out of the tax-free allowance!