Autumn Statement: Where are we now?

Key Tax Announcements

After three “budgets” in as many months, it can be difficult to keep track of the various Government announcements and what it has decided. Following on from Chancellor Jeremy Hunt’s Autumn Statement (aka Medium-term Fiscal Plan) on 17 November, we set out below a summary of the key tax announcements affecting employers and the workforce.

Income tax

There will be no reduction in the basic rate of income tax. It therefore remains at 20%. The personal allowance is to be frozen at £12,570 until April 2028.  Similarly, the higher rate threshold is to be frozen at £50,270 until April 2028. The 45% additional rate of income tax is to be retained and, from 6 April 2023, will apply to earnings over £125,140 (down from £150,000).  

National Insurance Contributions

On 6 November 2022, there was a 1.25% reduction in National Insurance Contributions for employers, employees and the self-employed. There are no further planned changes to NIC rates and the health and social care levy, which was due to come into force on 6 April 2023, has been scrapped.

The NICs primary threshold was increased in July 2022 to £12,570 (to align with the income tax personal allowance) and will remain frozen at that level until April 2028. The upper earnings limit has also been frozen at £50,270 until April 2028 and the lower earnings limit will remain at £6,393 until April 2024. The secondary threshold (the level at which employers have to start paying NICs) has been frozen at £9,100 until April 2028.

Capital Gains Tax

The 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.

Corporation tax

The rate of corporation tax will increase to 25% from 1 April 2023 (up from 19%).

VAT

The VAT registration and deregistration thresholds will remain at £85,000 until April 2026.

IR35/off payroll working

The IR35/off payroll working rules will not be changed. Therefore, large and medium sized end user clients will remain responsible for determining the tax status of contractors who provide their services through an intermediary, such as a personal service company. The fee payer (the person who pays the contractor’s intermediary) will remain responsible for operating PAYE and paying employer NICs. Often the end user client will be both the client and fee payer for these purposes. In the case of small end user clients, the intermediary remains responsible for determining tax status and for operating PAYE.

SEIS and the CSOP rules

An expansion of the SEIS and the CSOP rules is to proceed.  From April 2023:

• Companies will be able to raise up to £250,000 of SEIS investment, a £100,000 increase from the current limit of £150,000. In addition, to enable more companies to use SEIS, the maximum gross asset limit will be increased from £200,000 to £350,000 and the age limit, which requires a company to have been trading for less than two years, has now increased to three years. To support these increases, the annual investor limit will be also be doubled to £200,000.
• Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current maximum of £30,000. The qualification requirements for a company to be able to offer CSOPs will also be eased, better aligning CSOP rules with rules for more generous enterprise management incentive schemes.

The £1 million level of the Annual Investment Allowance is also being made permanent.

Investment zones The Government will not be proceeding with the introduction of Investment Zones as outlined in the Growth Plan in October. Instead, it will refocus the programme to catalyse a limited number of high potential clusters, working with local stakeholders, to be announced in the coming months. The existing expressions of interest will not be taken forward.