Autumn Statement 2022: What the Chancellor’s announcement means for individuals

Below our personal tax experts have set out what these changes could mean for you, and how to protect your wealth accordingly.

Income Tax 

The Chancellor announced a reduction to the additional rate tax threshold from £150,000 to £125,140 from 6 April 2023. This will increase the tax payable by those with significant incomes – the additional rate applying immediately after their personal allowance has been eroded.  

For those affected, this change will make tax planning even more critical. If salary sacrifice through an employer is possible this could be used to reduce taxable earnings. Taxpayers may also consider increasing their pension contributions or how to structure their remuneration package.  

The additional rate applies to savings and dividend income UK wide and for earned income in England, Wales, and Northern Ireland.  

Note - The Scottish Government could review the equivalent ‘Top Rate’ for Scottish Taxpayers in the Scottish Budget next month. 

The government will also reduce the Dividend Allowance – the amount at which dividend income can be received free of tax – from £2,000 to £1,000 from April 2023; reducing this further in April 2024 to £500.   

The income tax personal allowance and higher rate threshold along with National Insurance contributions (NIC) were already fixed at their current levels until April 2026 however it was announced today that these will be frozen again until 2028. 

Capital Gains Tax (CGT) 

In relation to Capital Gains Tax (CGT), there will be reductions to the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023; and then to £3,000 from April 2024. This means even modest gains could become taxable. 

Those with much more sizable investment portfolios, and existing business owners, will also be affected but the marginal impact will be more keenly felt by those with smaller investment portfolios. 

There is a separate reporting requirement based on an individual’s total sale proceeds from chargeable assets in any year.  Currently this threshold is set at four times the CGT annual exemption and to avoid this limit reducing to a very low level the Government will set this threshold at £50,000. 

The exemption available to trustees is linked to the personal allowance in legislation so this change will also reduce the ability to realise gains on settled property without incurring a tax charge. 

Inheritance tax (IHT) 

The inheritance tax (IHT) nil rate band (NRB) has been frozen again until April 2028 (originally April 2026). The NRB has remained at £325,000 since 2009 and given the ongoing inflation and house price increase, many more individuals are facing an inheritance tax liability on death making lifetime estate planning even more important.  

IHT receipts as a percentage of GDP are already at an all-time high and even the overdue cool down in the housing market is unlikely to change the course for some time. This means IHT planning is essential for families. Putting a will in place, making use of gifting allowances, placing assets in a trust, and regularly reviewing these plans can help to limit IHT exposure, and can be done now. 

Stamp Duty Land Tax (SDLT) 

Some of the announcements made by Kwasi Kwarteng in the Mini-Budget included the increases to the residential property nil rate and first-time buyers thresholds and for purchases in England and Northern Ireland.  Today, (17 November) it was announced that these increases from £125,000 to £250,000 and £300,000 to £425,000, respectively, would be a temporary measure and be ‘sunset’ from 31 March 2025.   

SDLT is a devolved tax so the Scottish and Welsh Governments will consider any reactions to their respective Land and Building Transaction Tax and Land Transfer Tax in their own Budgets. 

Find out more

Join us for a panel discussion on Monday 21 November at 10am where we will be giving our reaction to the announcements made, including analysis from our Chief Economist, George Lagarias.

Register here