In his Autumn Statement, the Chancellor set out the main Government policies of stability, growth and public services. The Office of Budget Responsibility (OBR) confirmed that the UK economy is in a recession. It predicts inflation will average 9.1% this year, falling to 7.4% next year, although this remains far above the Bank of England’s 2% target. Persistent inflation will have a detrimental impact on economic growth, which is forecast to fall 1.4% in 2023 before rising by 1.3%, 2.6% and 2.7% in the following three years. Hunt delayed the timeline on the proportion of debt to GDP falling from three years to five years, while no longer targeting current balance for public sector spending, instead stating that borrowing must be below 3% of GDP. The new measures he introduced today will lead to debt to GDP falling from 97.6% to 97.3% between 2025 to 2028, according to the chancellor.
With this in mind, the Chancellor stated that his aim was to avoid tax rises that damage growth. We had already seen most of the changes suggested by his predecessor unwound and whilst we didn’t see widescale tax hikes, we have seen most of the main allowances being frozen until April 2028.
The key takeaways are summarised below:
Income Tax
As anticipated, the personal allowance (£12,570) and higher rate threshold (£37,700 above personal allowance) will be frozen for a further 2 years to 2028.
The additional rate threshold will be reduced from April 2023 to £125,140 (previously £150,000).
Freezing the allowances is expected to generate £94bn whilst the changes to the additional rate threshold are expected to generate £420m in 2023/24 rising to £855m in 2027/28.
The dividend allowance is currently £2,000 but will be reduced from April 2023 to £1,000. This will fall further to £500 from April 2024.
Capital Gains Tax
As expected, the personal Capital Gains Annual Exempt Amount will reduce from April 2023. Initially, the decrease will be to £6,000 (tax year 2023/24) falling further to £3,000 in April 2024.
This £6,300 reduction costs taxpayers £630 at basic rate (£1,134 with 8% property surcharge) and £1,260 at higher rate (£1,764 with 8% property surcharge).
The £9,300 reduction from 2024 costs £930 (£1,674 with property surcharge) and £1,860 (£2,604 with property surcharge).
Inheritance Tax
The Inheritance tax main bands – Nil-Rate Band (£325,000) and Residence Nil-Rate band (£175,000) will remain frozen until April 2028. According to the Office of Budget Responsibility (OBR), this is estimated to net more than an additional £1 billion for government by the 2027/28 tax year.
Stamp Duty Land Tax
On 23 September this year, the level that stamp duty applies on purchase of a house was increased to £250,000 from £125,000 and in addition there were incentives on offer for first time buyers. The threshold for first time buyers was increased to £425,000 and for the band between £425,000 and £625,000 the SDLT would be 5%.
The Chancellor confirmed in the Autumn Statement that this increase will be reclassified as a temporary reduction in the SDLT and will now only remain in place until 31 March 2025.
National Insurance
It is confirmed that National Insurance lower earnings threshold (LEL) and small profits threshold (SPT) will remain fixed until 2023/24.
The Upper Secondary Threshold will stay fixed at £50,270 per annum until April 2028.
The Chancellor confirmed National Insurance contributions from 6 April 2023 will continue at their current rates. This means:
- Class 1A and 1B employers pay 13.8% on earnings over £9,100.
- Class 1 employees pay 12% on their earnings between the primary threshold and the upper earnings limit; between £12,570 and £50,270.
- Class 1 employees pay 2%, on their earnings above the National Insurance contributions upper earnings limit.
State Pension Triple Lock
Following weeks of uncertainty, the Chancellor confirmed that the basic state pension and the new state pension will increase by inflation (10.1%) next April. The current and new weekly rates are shown below:
| Full new state pension | Basic state pension | |
| 2022/23 | £185.15 | £141.85 |
| CPI Sept | 10.1% | |
| 2023/24 | £203.85 | £156.20 |
(Note: Pre 6 April 2016 additional state pensions increase by CPI each year not by the triple lock).
This will mean that pensioners are £870 better off a year representing the biggest ever cash increase in the state pension.
Pension credit, paid to the poorest pensioners, was also increased by 10.1%, which is worth up to £1,470 for a couple and £960 for a single pensioner.
Workers on the National Living Wage will also receive a boost. It will be increased from £9.50 an hour for over-23s to £10.42 from April next year, raising the pay of about two million people.
State Pension Age
The Government is currently reviewing whether the current timetable to increase in the state pension age (legislated to increase over the next 25 years) remains appropriate and will publish its review in early 2023.
Care Reform Delay
The Chancellor also announced a delay in the implementation of a care cost cap.
Hunt said councils had ‘very real concerns’ about their ability to deliver the reforms set out by Andrew Dilnot, which would limit the amount a person in England would have to pay for social care at £86,000 per person.
‘I will delay the implementation of this important reform for two years, allocating the funding to allow local authorities to provide more care packages,’ he said.
Energy Cap Extension
The government confirmed it will stick with the plan to spend £55bn to help households and businesses with their energy bills.
From April, the government will continue the energy price guarantee for a further 12 months at a higher level of £3,000 per year for the average household. This will mean an average of £500 support for every household in the country.
On top of this, a cost-of-living payment of £900 will be made to households on means-tested benefits, £300 provided to pensioners, and £150 for those claiming disability benefit.
Other takeaways:
- Meanwhile, the windfall tax on oil and gas companies will increase from next year from 25% to 35%.
- The chancellor also reaffirmed the government’s commitment to the Glasgow agreement made at COP26 last year, targeting a 68% reduction in emissions by 2030.
- However, he introduced measures to institute a 45% levy on electricity generators, while expanding road tax to electric vehicles from 2025.
- Hunt also reaffirmed the government’s commitment to Bank of England independence, arguing that it had done an “outstanding job” and the country needed “fiscal and monetary policy to work together”
- The Chancellor highlighted three key areas to target for growth: Energy, infrastructure and innovation. To target these, he announced a nuclear power station at Sizewell C would be going ahead, while big infrastructure projects like Northern Rail and HS2 are also continuing. He also announced planned changes to regulation in five growth industries of “digital, life sciences, green industries, financial services and advanced manufacturing”
- Electric cars, vans and motorcycles to pay road taxes from April 2025
- The Chancellor confirmed the proposed increase in Corporation Tax to 25%, planned for 1 April 2023, will take place. Companies with less than £50,000 profit will see no change and remain at 19% and those companies between £50,000 and £250,000 of profits will pay the main 25% rate but with some relief applied
