The eagerly anticipated Autumn Statement has definitively been announced since Jeremy Hunt delayed the budget, initially scheduled for the 31st of October, to yesterday (17/11/2022). The salient outcomes of the budget are as follows:
- State Pension triple lock retention
As a staple point of the conservative manifesto, the triple lock rule will be upheld, with the state pension rising in line with September’s inflation rate of 10.1%. This will come as a relief to many pensioners as this will offer some stability for our elders during the current cost of living crisis.
- CGT allowance cut
The current CGT allowance of £12,300 is to be cut to £6,000 from April 2023 and then to £3,000 from the following April 2024. As such, the threshold for paying capital gains tax has fallen, meaning disposals will be subject to more tax.
- IHT thresholds are frozen for longer
The current frozen threshold for Inheritance Tax (IHT) is to finish its term in April 2026. However, the Autumn update has announced that this term is to extend by another 2 years. Subsequently, the current nil rate band and residency nil rate band, £325,000 and £175,000 respectively, will continue until April 2028.
- Income tax threshold changes
The Chancellor has stated that the Basic and Higher rate thresholds are to be frozen by another 2 years, running until the 2028/29 tax year. However, the additional rate tax threshold of £150,000 is set to reduce to £125,140; adjusted to the same level of income whereby your personal allowance has fully tapered.
- Social care cap delay
In a bid to address the social care funding crisis, Jeremy Hunt has reversed Boris Johnson’s social cap implementation for at least 2 years. While this may come as a blow to many people, Hunt has assigned social care grants £1bn next year and £1.7bn thereafter.
- Cost of living payments
In addition to the existing cost of living payments, there is to be the one-off cost of living payments worth up to £1,350. This is made up of £900 for those on means-tested benefits, £300 for pensioners and £150 for those on disability benefits.
- Energy independence
Hunt has announced an accelerated effort to make the UK energy independent. As a priority, the nuclear power industry is set to “create new jobs, industries and exporting opportunities” whilst helping the government achieve its zero emissions target by 2050.
- Energy Price cap extension
The current energy price guarantee is to be extended through April 2024, continuing to limit energy bills to £2,500 per annum. Thereafter, this limit is to rise to £3,000 once the current energy price term ceases.
- Energy supplier tax increase
As of the new year, 1st January 2023, taxes on energy profits are increasing by 10 points to 35%. In a similar fashion, oil and gas firms will see their profits taxed at 75% as opposed to the current 65% rate. The Chancellor expects this to raise £14bn next year.
- Dividend allowance cut
The dividend allowance is set to be cut to £1,000 from its current level of £2,000. In line with the CGT limit cut, this allowance is to reduce to £500 in the subsequent tax year, April 2024.
Our Strategic Views
This, of course, is going to have an impact on our investment strategies and portfolios, which will be unique to every individual’s circumstances during this period of change. If you have any immediate concerns please contact us, otherwise, your financial adviser will cover this with you in a greater amount of detail specific to your needs and objectives.
