Autumn Statement 2022: At a glance
Chancellor Jeremy Hunt set out his Autumn Statement in Parliament today. Measures announced include:
- From April 2023, the rate at which people pay the additional rate of income tax, charged at 45%, will change from £150k to those earning more than £125,140
- National Living Wage will be raised to £10.42
- The tax-free dividend allowance will be reduced to £1,000 in 2023-2024 and then to 2024-2025
- Tax-free allowance for capital gains will reduce in 2023-2024 from £12,300 to £6,000 and again to £3,000 in 2024-2025
- From 2025, road tax will be introduced for electric vehicles
- Stamp duty cuts announced in the Growth Plan will now end on 31 March 2025
- Global tax reforms will be introduced from 31 December 2023 to ensure multinational corporations pay their “fair share”
- The rate of the Energy Profits Levy has been increased to 35% and has been extended
- £13.6bn will be provided as business rates support
- £280m will be invested in the Department for Workplace & Pensions to crack down on “fraud, error & debt”
- The budget for schools will be increasing by £2.3bn next year and £2.3bn the year after that
- Up to £2.8bn is being provided for adult social care in 2023-2024 and £4.7bn the year after
- To improve the NHS, £3.3bn will be invested in 2023-2024 and a further £3.3bn in 2024-2025
- Devolved administrators will receive £3.4bn over the next two years (£1.5bn – Scotland, £1.2bn – Wales, £650m – Northern Ireland)
- £600bn of capital investment will be made over the next five year
- Round 2 of the Levelling Up Fund will invest at least £1.7bn in local projects
In his statement, Hunt announced a reversal of almost all of the tax measures set out in the Growth Plan by Kwasi Kwarteng that have not been legislated for in parliament. The following tax policies will no longer be taken forward:
- The basic rate of income tax will be cut to 19% “if and when economic conditions allow for it and a change is affordable”. The basic rate of income tax will remain at 20% indefinitely.
- Cutting dividends tax by 1.25% from April 2023. The 1.25% increase, which took effect in April 2022, will now remain in place. The Chancellor says this is valued at around £1bn a year.
- Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place. This is estimated to cut the cost of the government’s Growth Plan by around £2bn.
- Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain. Not proceeding with this scheme is also worth around £2bn.
- Freezing alcohol duty rates from 1 February 2023 for a year. Not proceeding with the freeze is worth approximately £600m a year. The Alcohol Duty Review announced in Growth Plan 2022 will continue as planned.
The following tax policies will continue:
- The government’s reversal of the National Insurance increase and the Health and Social Care Levy, and the cuts to Stamp Duty Land Tax, will remain.
- The £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue.
- Corporation Tax as previously announced by Liz Truss will not be cut.
- The Energy Price Guarantee and the Energy Bill Relief Scheme will continue until April. A Treasury-led review will then be launched to consider how to support households and businesses after April 2023.
Hunt also said he wanted “some more independent, expert advice” as he started his “journey” as Chancellor.
He has now formed an Economic Advisory Council. The first four names have been announced today: