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Updated: 21 November 2022
Hot on the heels of the highest inflation figure in 41 years, which hit 11.1% in October 2022, the Chancellor unveiled his long-anticipated Autumn Statement. Here we take a look at the key announcements and how these will affect businesses in the months to come.
In a bid to support the lowest paid, the UK national living wage will rise for people over the age of 23 from £9.50 to £10.42 an hour, starting from April 2023.
Previously, the 45% additional rate of income tax was reserved for those earning over £150,000. However, the announcement today has expanded this to include those earning over £125,140, which the Government expects will pull an extra 250,000 people into the top bracket. It estimates that the change will mean high earners pay around £1,200 more in tax a year.
Though income tax personal allowance and higher rate thresholds had been frozen until 2026, they will now be frozen for a further two years, until 2028. The current income tax personal allowance is £12,570, while the higher rate of income tax (40%) starts at £50,271. In addition, the National Insurance threshold, which currently sits at £12,570, has also been frozen until April 2028.
As wages go up over time, this means that a higher proportion of pay will be taxable. So while it isn’t an immediate tax increase, workers will pay more tax over time.
Tax-free allowances for dividends will be cut from £2,000 to £1,000 in April next year, and will see a further reduction to £500 from April 2024. Additionally, the rate of income tax applicable to dividend income will rise by 1.25%.
In a similar vein, tax-free allowances for capital gains tax will also see a cut, decreasing from £12,300 to £6,000 from April 2023. It will then drop further to £3,000 from April 2024.
The threshold for Employer National Insurance contributions is to be fixed until April 2028. However, the Employment Allowance will be retained at its new, higher level of £5,000. This will mean that 40% of businesses will continue to pay no National Insurance contributions at all.
Business rate bills were to be updated to reflect changes in property values since the last revaluation in 2017. This will go ahead in April 2023, as previously planned.
To protect businesses from rising inflation, the multiplier on business rates will be frozen in 2023-24, keeping the small business multiplier and standard multiplier at 49.9p and 51.2p respectively. This will support all ratepayers, large and small, meaning business rates bills are 6% lower than without the freeze.
Also, relief for businesses in the retail, hospitality and leisure sectors will be increased from 50% to 75% next year, up to £110,00 per business.
In addition, to help businesses adjust to the revaluation of their properties, a Transitional Relief scheme of £1.6 billion has been announced, capping bill increases for those who’ll see higher business rates bills as a result of revaluation. It will limit bill increases for the smallest properties to 5%, while medium-sized and larger properties will be capped at 15% and 30% respectively.
Small businesses that lose eligibility for either the Small Business or Rural Rate relief as a result of the new property revaluations will see their bill increases capped at £600 per year from April 2023.
Although there were some updates to the cap on energy bills for households, there were no further updates for businesses relating to the Energy Bill Relief Scheme (EBRS) in the budget this time around.
If you’d like to learn more about the scheme, you can find out more in our previous article on the mini budget.
Oil and gas firms will see a further tax on their profits, as the windfall tax will rise from 25% to 35%. The tax on profits has also been extended until March 2028.
In addition to the tax rise on oil and gas windfall profits, the Government has also introduced a new temporary 45% tax on companies that generate electricity. This new tax will apply from January 2023.
Although electric cars have been exempt from Vehicle Excise Duty, as of April 2025, this will no longer be the case. The Government said that the move was designed to make the motoring tax system “fairer”.
When it comes to company car tax for electric vehicles, this will increase by 1% year-on-year for three years from 2025. This means it’ll still be kept lower than traditionally fuelled cars.
Capital budgets won’t be cut for the next two years and will be maintained at that level in cash terms for the following three years. Although the capital budget won’t be grown as originally planned, the Government still plans to increase it to £114 billion next year and £115 billion the following year.
The Government also announced that many major infrastructure projects will continue as planned. These will include:
Over 100 goods used by UK businesses in their production processes, such as car seat parts and bicycle frames, are to be removed from import tariffs.
The previous stamp duty cuts from the mini budget were due to be in place permanently, but now will only remain in place until 31st March 2025.
The VAT registration threshold is due to be maintained at its current level until March 2026.
18/11/22: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.
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