December 8. 2022
Chancellor Jeremy Hunt delivered his first full budget on the 17th November 2022, this was the third fiscal statement of recent and as there has been some changes following previous announcements, we wanted to compile a collective overview.
This overview does include some previously announced changes, but we thought it would be beneficial to summarise everything in one place.
Income Tax
- The income tax personal allowance and higher rate threshold were already fixed at their current levels until April 2026 and will now be maintained for an additional two years until April 2028. They will be £12,570 and £50,270 respectively.
- Basic rate of income tax remains at 20% indefinitely.
- The personal allowance and basic rate band for Income Tax were already frozen until 2025/26 but are now frozen until 2027/28.
- The 45% additional rate of income tax is retained and the point at which it starts is lowered from £150,000 to £125,140 from 6 April 2023.
Dividends
The government has also confirmed that, from April 2023, the rates of taxation on dividend income will remain as follows:
the dividend ordinary rate - 8.75%
the dividend upper rate - 33.75%
the dividend additional rate - 39.35%. As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%
In addition, the government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024. These changes will apply to the whole of the UK.
National Insurance
National Insurance Contributions (NIC) extra temporary increase of 1.25% reversed (and the newish Health and Social Care Levy which was to follow on cancelled).
NIC thresholds frozen from April 2023 until April 2028.
The government will update the married couple’s allowance and blind person’s allowance by inflation for 2023/24.
Following the principle detailed above, the changes to Class 4 NICs will again be averaged across 2022/23, so that the rates will be 9.73% and 2.73%.
Capital Taxes
Capital Gains Tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Inheritance Tax nil-rate band frozen at £325,000 for a further two years until April 2028.
Stamp Duty Land Tax (SDLT) changes made earlier this year by the mini-budget remain, but only until 31 March 2025.
Other measures
Vehicle Excise Duty – from April 2025 electric cars, vans and motorcycles will begin to pay in the same way as petrol and diesel vehicles.
Energy Profits Levy increased and extended.
Cost of living payments – further payments in 2023/24.
Increases in the National Living Wage and the National Minimum Wage rates.
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