Nov 2022
Jeremy Hunt, has delivered his first Autumn Statement speech as Chancellor of the Exchequer. It was a highly-anticipated speech that was forecast to announce a range of tax increases that would tighten the belt of the country’s finances.
Mr Hunt declared that the country was heading towards recession, indeed, if we were not there already, with families making sacrifices as the cost of living has increased exponentially.
His budget was based on a plan that he said would lead to a “shallower recession” and higher long term growth as he sought to prioritise stability, growth and public services.
Highlights included billions of pounds of additional NHS and schools funding, but these were teamed with frozen tax thresholds and extending the windfall tax on energy producers.
Here is a summary from Mr Hunt’s speech.
Economic forecasts
- GDP will fall 1.4% in 2023 before bouncing back to growth of 1.3% in 2024. It is predicted that the UK’s inflation rate will be 9.1% this year and 7.4% next year.
- OBR has forecast borrowing to hit 7.1% of GDP, or £177bn, in 2022/23 and 5.5% of GDP, or £140bn, in 2023/24.
Tax changes and wages
- The threshold for the top rate of income tax has been cut from £150,000 to £125,140.
- The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.
- The Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.
- The windfall tax targeting the profits of energy companies is being extended. From January 1st until March 2028, the Energy Profits Levy will rise from 25% to 35%
- Electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
- The Employers NICs threshold will be frozen until April 2028 but the employment allowance will be kept at its high level of £5,000.
- There will be £14bn tax cuts for business rates over next five years.
- UK minimum wage for people over 23 to increase from £9.50 to £10.42 per hour.
- IHT threshold frozen until April 2028.
Stamp Duty cuts introduced this year will remain until March 2025.
Public spending
- The NHS budget will increase by an extra £3.3bn in both of the next two years.
- Schools will be given by an extra £2.3bn in both 2023/24 and 2024/25.
- Social care funding will increase by £2.8bn next year and £4.7bn the following year, Mr Hunt said. It includes extra grant funding of £1bn next year and £1.7bn the year after.
- The defence budget will remain at a minimum 2% of GDP but delayed the return to an international aid target of 0.7% of GDP target.
Energy
- The cap on energy bills will rise from £2,500 to £3,000 in 2023.
- An extra £900 of energy bills support will be provided to households on means-tested benefits, £300 more will be given to pensioners and £150 will be given to those on disability benefit.
- The Government will double investment in energy efficiency to hit a new aim of reducing energy consumption from buildings and industry by 15pc by 2030. An extra £6bn of funding to boost energy efficiency will be provided from 2025.
If you’re concerned about how the Autumn budget may affect you or your business and you’d like some advice, contact Downs Solicitors to see how we can help.
