Late Autumn Budget 2022 Jeremy Hunt
The Chancellor Jeremy Hunt announced his first autumn budget today and explained that he had applied “fairness and compassion” when administering the tax rises to ensure that the poorest wouldn’t bear the biggest burden of tax rises, and stressed that “those with the broadest shoulders” will pay the most tax.
An example of this was the Chancellor lowering the threshold of the 45% rate from £150,000 to £125,000. He also rolled out a number of other measures to raise income for the treasury including halving the £12,300 tax-free allowance for capital gains to £6,000.
As for the other business taxes, Hunt decided to freeze the employers’ NI threshold until April 2028. “We will retain the employment allowance at a new higher level of £5,000. This means 40% of all businesses will pay no NICs at all,” said Hunt.
Against inflation hitting a 41-year high of 11.1%, here are the main areas.
- National Insurance. As already mentioned, the employment allowance will remain at the current level of £5,000. The main NI thresholds will also be held at the current level until April 2028.
- Capital gains tax (CGT). There is no change to the CGT rates, but the annual exempt amount will be cut from £12,300 to £6,000 from 6 April 2023, and then to £3,000 the following year.
- The increase in stamp duty land tax allowances announced at the mini-Budget will be retained, but only until 31 March 2025.
- The Inheritance Tax nil rate band -the amount an individual can leave tax free on death – will be frozen at £325,000 for a further two years until 2028.
- Electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
- National living wage to increase to £10.42 per hour (9.7%) from 1 April 2023.(to clarify, this is not the same as the minimum wage and is not a legal obligation on employers).
- An expansion to the energy windfall tax from 25% to 35% – The chancellor also confirmed that the existing windfall tax on North Sea oil and gas operators, the energy profits levy (EPL), will be raised from 25% to 35% and extended by two years, until March 2028 and imposed a 45% levy on electricity generators to raise an estimated £14 billion next year.
- The NHS budget will be increased by an extra £3.3 billion in each of the next two years, he announced as part of a “record £8 billion package” for the health and social care system.
- In a bid to free up some of the 13,500 hospital beds occupied by those who should be at home, Mr Hunt allocated for adult social care additional grant funding of £1 billion next year and £1.7 billion the year after.
- The government has also fulfilled its promise to protect the pensions triple-lock and confirmed that state pensions will rise in line with inflation.
- For the poorest pensioners, the pension credit will increase by 10.1%. The Treasury calculates this would be worth up to £1,470 for a couple and £960 for a single pensioner.
- Tax free Dividend allowance will be cut to £1,000 and then a year later £500
- VAT threshold maintained until March 2026
- R&D relief for SMEs cut to 86% (from 130%) and the credit rate to 10%
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