Autumn Statement 2022

Taxsteins Ltd’s Commentary on Autumn Statement 2022

According to the Chancellor, society’s strongest members should shoulder the heaviest responsibilities. These businesses are being featured. Spending on taxes has increased by 1% of GDP.

Prior to the declaration, a thorough review examined several precautions. The findings are astounding: freezing the NIC threshold for employers could yield an annual revenue of £5 billion. Moreover, the energy industry is imposing further windfall taxes, specifically targeting low-carbon energy producers.

Will this have any bearing on investment and industry rivalry? The focus of the statement was expansion. The tax benefits of investing are dwindling. There is no alternative to the tax break that comes in the form of a super deduction every April. Because of this, UK capital allowances are less competitive than those in other developed economies.

The tax breaks for R&D that used to only benefit small and medium-sized enterprises are now available to much larger corporations. This points to abuse in SME sector, but relief will be capped in most cases.

For small businesses in the retail, leisure, and hospitality sectors, the expansion of business rates relief and the freezing of the multiplier are both positive steps in the right direction.

Tax complexity might negatively impact the level of competitiveness. The simplifications made by the former chancellor are on hold. The need to conform will increase as income and prosperity rise. There will also be OECD Pillar 2. Despite setting the minimum tax rate at 15%, the Treasury expects to raise an additional £2.0 billion. Also, a higher rate of conformity.

That didn’t shock the chancellor at all. The UK’s tax competitiveness has decreased due to high tax rates, reduced relief, and rising complexity.

Please see below a few of the changes in the Autumn Statement 2022

Taxes on Business Income

  1. The current rate of corporation tax, which is 19%, will go up to 25% in April 2023.
  2. As a direct result of the Corporation Tax rate going up from 20% to 25%, the Bank Corporation Tax Surcharge will go down from 8% to 3% in April 2023. This rule is for financial institutions that make more than £100 million a year.
  3. As of January 1, 2023, the Energy Profit Levy (EPL) rate will go up by 10 percentage points, to 35%. The Investment Allowance will also go up by the same amount. Investing costs will now only be able to get a 29% tax break (other than decarbonization expenditure).
  4. In the United Kingdom, low-carbon energy production will have to pay a new tax called the Electricity Generator Levy (EGL) at a transitional rate of 45%. Starting on January 1, 2023, the levy will apply to returns that are above average.

Research and Development Expenditure Credit (RDEC)

  1. Research and Development Expenditure Credit (RDEC) rate will go from 13% to 20% for purchases made on or after April 1, 2023. Small and medium-sized firm (SME) additional deduction will go from 130% to 86%. SME credit rate will go from 14.5% to 10%. A public forum will be held soon to talk about how to make a unified R&D program. Draft legislation that was made public earlier this year will be passed to change R&D tax reliefs by making data and cloud spending eligible, shifting the focus of funding back to British innovation, cracking down on abuse, and making it easier to follow the rules.
  2. For corporate tax purposes, the FYA for EV charging stations has been extended to March 31, 2025, and for individual tax purposes, it has been extended to April 5, 2025.
  3. On April 1, 2023, workers aged 23 and up will get a 9.7% raise to £10.42 per hour, which will be the new NLW. People under the age of 23 and apprentices pay less.
  4. National Insurance premiums paid in full The Secondary Threshold, which is the amount of income below which Class 1 Secondary NICs are not due, will stay at £9,100 from April 2023 to April 2028.
  5. The government is giving HMRC an extra £79 million over the next 5 years so that it can hire more people to deal with rising cases of big tax fraud and problems with tax compliance among high-net-worth taxpayers. This is so that HMRC can hire more people to deal with these problems. This spending is expected to raise an additional £725m in taxes over the next 5 years.

Personal Tax

  1. At £12,570 and £50,270, respectively, the personal allowance and the income at which a person starts paying tax at the 40% rate will stay the same until April 2028.
  2. On April 6, 2023, the amount of income above which you have to pay an extra 45% in tax will drop from £150,000 to £125,140.
  3. The main thresholds for national insurance won’t change until April 2028.
  4. The amount of the inheritance tax exemption won’t change again until April 2028. The nil-rate band for primary residences stays at £2 million, the residential nil-rate stays at £175,000, and the nil-rate band for other properties stays at £325,000.
  5. The amount of dividends that can be taken is going down from £2,000 in April 2022 to £1,000 in April 2023 to £500 in April 2024.
  6. The untaxed amount of annual capital gains will decrease from £12,300 in April 2023 to £6,000 in April 2024 and further to £3,000 in April 2025.
  7. Beginning in April, the State pension will increase at the rate of inflation as part of the triple-lock system for pensions.

Stamp Duty taxes and business rates

  1. The first-time buyer nil-rate threshold rise from £300,000 to £425,000 and the SDLT nil-rate threshold increase from £125,000 to £250,000 will expire in March 2025. We’re returning the allowances to their prior levels as of this date.
  2. On April 1, 2023, business rate bills in England will undergo alterations to align with property value changes since the last revaluation in 2017. Some examples of the assistance provided are as follows:?
  • In 2023-24, the 49.9p and 51.2p multipliers for business rates will stay the same.
  • The Upwards Transitional Relief under the Transitional Relief Scheme will limit the increase in rates for properties when their values are revalued in 2023.
  • In 2023-24, businesses in the retail, restaurant, and leisure industries that meet specific criteria will have their business rates relief increased from 50% to 75%, capped at a maximum of £110,000 per business.
  • For the smallest firms that are no longer qualified for any relief, the Supporting Small Business Scheme will cap annual bill increases at £600 as of April 1, 2023. (SSBS).
  • The newly introduced improvement relief initially planned to start in the Autumn Budget 2021 but now scheduled to begin in April 2024, will be implemented.

Other indirect taxes and duties

  1. VAT registration and deregistration threshold will remain at £85,000 until April 2026.
  2. Tolls known as Vehicle Excise Duty (VED) will be levied on electric automobiles, vans, and motorcycles beginning in April 2025. The administration has made the decision not to tax purchases made over the Internet (OST). The OST consultation response will then be provided to you in writing.
  3. Import taxes on more than a hundred goods will be waived for two years.

Given the uniqueness of everyone’s situation, it shouldn’t be regarded as absolute truth. Seek specific guidance when necessary.