Get organised to beat the tax chill

During the Autumn Statement Jeremy Hunt set out his plan to “tackle the cost-of-living crisis and rebuild our economy.” To shore up the country’s finances the Chancellor laid out spending cuts and tax rises totalling around £55bn.

Key personal taxation announcements included:

  • The annual Capital Gains Tax (CGT) exemption will be reduced from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024
  • The Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023, and then to £500 from April 2024
  • The Income Tax additional rate threshold (ART) at which 45p becomes payable will be lowered from £150,000 to £125,140 from 6 April 2023. The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales and Northern Ireland. The ART for savings and dividend income will apply UK-wide. This move is set to push 250,000 more people into this band
  • The Income Tax Personal Allowance and higher rate threshold are to remain at current levels – £12,570 and £50,270 respectively – until April 2028 (rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved)
  • The change to the Stamp Duty Land Tax (SDLT) threshold for England and Northern Ireland, announced in the former Chancellor’s ‘mini-budget’ in September, will now remain in place until March 2025. This means that the nil-rate threshold will stay at £250,000 for all purchasers and £425,000 for first-time buyers, compared to £125,000 and £300,000 previously.

In addition, some key allowances and thresholds are frozen at their current levels:

  • Inheritance Tax nil-rate bands remain at £325,000 nil-rate band, £175,000 residence nil-rate band, with taper starting at £2m – fixed at these levels for a further two years until April 2028
  • National Insurance contributions (NICs) Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) frozen for a further two years until April 2028
  • The 2022-23 tax year ISA (Individual Savings Account) allowance remains at £20,000 and the JISA (Junior Individual Savings Account) allowance and Child Trust Fund annual subscription limits remain at £9,000
  • Both the Annual Allowance and Lifetime Allowance for pensions are frozen at their current levels, £40,000 and £1,073,100 respectively. As these allowances haven’t increased with inflation, it effectively means those saving to the maximum extent possible with tax concessions can save less in real terms each year.

Remember

Although some of these changes don’t come in with immediate effect, it is vital to ensure you are in the best place possible to take advantage of any allowances, exemptions and reliefs available this tax year and to prepare for the changes that come in over the next few years.

This article is for information purposes only. Sensible financial planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. This is where we can help – please get in touch.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.