Jeremy Hunt has delivered the much anticipated Autumn Budget to parliament, addressing how the government will restore Britain’s public finances.
As expected, the Autumn Statement sets out to tackle the cost of living crisis and rebuild our economy; focussing on stability, growth and public services.
The International Monetary Fund expects one third of the world’s economies will be in recession this year or next. Mr Hunt’s Autumn Budget statement sets out to deliver a consolidation of £55 billion and means inflation and interest rates end up significantly lower.
Fiscal policy will be used to support the economy which means changes to tax and interest are a key part of the Chancellor’s budget.
In short, the budget outlines that those with more are asked to contribute more and that tax rises that cause the most damage to growth will be avoided.
The threshold for which the 45p tax rate becomes payable will be dropped from £150,000 to £125,140.
Current levels of income tax personal allowance, higher rate threshold, main National Insurance thresholds and the Inheritance Tax thresholds will be maintained for a further two years taking us to April 2028.
Dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024 and 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.
From April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty. Company car tax rates will remain lower for electric vehicles and rate increases will be limited to 1 ppt a year for three years from 2025.
The Office for Budget Responsibility expects housing activity to slow over the next two years, so the Stamp Duty cuts announced in the mini-budget will remain in place but only until 31st March 2025.
While the Employers NICs threshold will be frozen until April 2028, the Employment Allowance will be kept at its new, higher level of £5,000.
The VAT registration threshold will be kept at its current level until March 2026.
The R&D deduction rate for the SME scheme will be cut to 86% and the credit rate to 10%. However, the rate of the separate R&D expenditure credit will be increased from 13% to 20%.
From January 1st until March 2028 the Energy Profits Levy will be increased from 25% to 35%. The structure of our energy market also creates windfall profits for low-carbon electricity generation so, from January 1st, a new, temporary 45% levy on electricity generators will be introduced.
If you want to discuss how these changes will affect you or your business, or If you need business advice, help with business accounting or support on tax, get in touch with our specialised accountants at James & Uzzell today to see how we can help.