Autumn Statement 2022


Today Jeremy Hunt has set out his Autumn Statement; his attempt to stabilise the tempestuous economy. He has lowered the threshold at which the 45% rate of income tax is paid from £150,000 to £125,140 as he sets out “difficult decisions” on Personal Tax thresholds. Here's everything you may have missed in today's announcement.

  • The Chancellor has reduced the threshold at which the additional rate of income tax applies from £150,000 to £125,140, pulling more of the highest-income taxpayers into the 45 per cent rate of taxation. So if you earn above £125,140 you'll pay more income tax with the 45% rate paid on income over £125,140. This will only affect an individual earning £150,000, who will pay £1,243 more income tax each year, About 2.6 million people will also face paying the higher tax rate by 2027-28.
  • Jeremy Hunt confirms the cuts to stamp duty announced by former chancellor Kwasi Kwarteng will remain in place for now, but will end on 31st March, 2025. Experts are already saying that this 'tweak' threatens to weaken the housing market.
  • Hunt says social housing rents will be capped at 7% next year, to avoid rent hikes of up to 11%
  • Income Tax, Personal Allowance and higher rate thresholds will be frozen until April 2028. If your income increases over the next five years, you will pay more income tax as income tax bands stay the same. This will affect millions of employees. If your pay increases with inflation, you'll now see less take-home pay than previously as you'll pay tax on more of your income.
  • Dividend tax-free allowances will be slashed in 2023 and 2024. Currently, you can earn £2,000 in dividends tax-free. This will fall to £1,000 in April 2023 and halve again to £500 in April 2024. This will affect business owners and investors who rely on dividend income to live off.
  • The capital gains tax-free allowance will drop significantly. The current tax-free allowance is £12,300 which will drop to £6,000 in April 2023. From April 2024, this will drop again to £3,000 tax free profits. This will affect investors, landlords and second-home owners planing to dispose of assets.
  • Triple lock pensions will be kept. This will help pensioners with the cost of living. To protect the most vulnerable, the Chancellor unveiled £26 billion of support for the cost of living including continued energy support, as well as 10.1% rises in benefits and the State Pension and the largest ever cash increase to the National Living Wage.
  • There is increased help for the lowest earners. The national living wage will increase by 10% to £10.42 per hour. Energy cost support will extend from April 2023 for those on benefits, State Pensioners and those receiving Disability Allowance. There will be an additional £1bn of funding to enable further extension to household support funding during the ongoing cost of living crisis.
  • Road tax is also to be reformed, with electric vehicles no longer exempt from Vehicle Excise Duty from April 2025 to make the motoring tax system "fairer".
  • The UK economy is set to remain below pre-Covid levels until 2024.

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