In today’s Autumn Statement, Chancellor Jeremy Hunt warned of a substantial tax increase. Many of the tax increases are hidden in plain sight through freezing across a range of measures.
One announcement welcomed by many was that there will be a windfall tax on energy companies from January 2023 to March 2028, at 35%; and that a temporary higher tax of 45% will be placed on electricity generators.
The anticipated changes to non-dom tax levels or remittance basis were not made, perhaps unexpectedly, however additional measures around shares and securities held in non-UK companies were announced along with a general increased commitment to tackling tax fraud and evasion.
Commitment to public services was underlined with spending pledges in three key areas: infrastructure, energy and innovation, with clear support for education, energy, and health with “Scandinavian quality against Singaporean efficiency” balanced against “British compassion” sought for the latter. Somewhat controversially, plans for a new nuclear power plant at Sizewell were announced.
The government’s R&D budget has been protected with plans to develop the UK as a “science super power” and plans for a British Silicon Valley.
Overall, Hunt has pledged support towards a “high wage, high skill economy, supporting people, capital and ideas”.
His final rallying cry was that whilst the “recession is made in Russia, recovery will be made in Britain”.
The latest changes to UK tax measures:
Measures for businesses
The Chancellor sent a clear signal that further measures will be taken over “tax evasion and avoidance” alongside an announcement of additional funding for HMRC to enable them to allocate additional staff to tackle fraud.
1. CGT: the government will legislate in the Spring Finance Bill 2023 so that shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK. This will have effect where an individual has a material interest in both the UK and the non‑UK company and where the share exchange is carried out on or after 17 November 2022. Draft legislation and supporting documents will be published alongside the Autumn Statement.
2. Transfer pricing documentation: from April 2023, large multinational businesses operating in the UK will be required to keep and retain transfer pricing documentation in a prescribed and standardised format, set out in the OECD’s Transfer Pricing Guidelines (Master File and Local File). This will give businesses certainty on the appropriate documentation they need to keep and enable HM Revenue and Customs (HMRC) to effectively identify risks and conduct transfer pricing investigations more efficiently. This will be legislated for in Spring Finance Bill 2023. HMRC will continue to consult on a Summary Audit Trail which is a questionnaire that businesses would be required to complete that covers the main steps undertaken in preparing the Local File.
3. The R&D additional deduction for SMEs has been cut from 130% to 86%, apparently due to fears over misuse, whereas the main R&D expenditure credit (RDEC) has been increased from 13% to 20%.
4. National Insurance rate is frozen until April 2028, at 13.8% on earnings of workers over £9,100 per year.
5. The National Living wage is being increased by 9.7% to £10.42 per hour from April 2023
6. The VAT threshold has been frozen at £85,000 until 2026.
7. The Investment Zones proposed by Kwasi Kwarteng have been scrapped.
8. A business rates relief package was announced whereby “bills will more accurately reflect market values” so properties will be revalued from April 2023. Hunt said that 2/3 of properties should not pay more than last year.
Personal tax rates and National Insurance
9. The 45% top level of tax currently payable on salaries over £150,000 will be changed to a threshold of £125,0140 from April 2023. According to Hunt, “taking more from those who have more”.
10. Other income tax thresholds have been frozen at the current level until April 2028
11. As predicted, the dividend allowance will be cut from £2,000 to £1,000 in 2023, then to £500 from April 2024.
12. The inheritance tax allowance is frozen until April 2028.
13. The Capital Gains Tax annual exempt amount will be cut from £12,300 to £6,000 in April 2023 then to £3,000 from April 2024, affecting people who sell their businesses or second homes or additional properties.
14. Perhaps unexpectedly, no additional taxes were placed on non-doms nor were any restrictions imposed on the current non-dom remittance basis regime.
15. There will be a review of the state pension age arrangement in 2023, perhaps a warning shot across the bows for younger people to prepare to see their eligibility age rise further. In the meantime, the pensions triple lock will increase in line with inflation in April 2023.
16. For households, support to help with energy bills will continue from April 2023, with the energy price cap set to £3,000.
17. The current stamp duty cut will remain in place 31 March 2025
How we can help
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If you need help with any tax-related issues, contact us on 01761 241 861 or firstname.lastname@example.org or make an appointment to visit us at our Somerset or central London office.