Autumn Statement 2022 at a glance

Chancellor's Autumn Statement 17 November 2022

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Background

Jeremy Hunt's first Autumn Statement is set against 11.1% inflation, 3%-and-rising interest rates, the threat of a long recession, conflict in Ukraine causing grain and gas shortages, a 70-year high tax burden, and a large hole in the public finances that needs to be plugged.

The statement had more trailers than a Hollywood movie, warning of "eye-watering" spending cuts and significant tax rises: A Perfect Storm in fact, with the Chancellor navigating an austere course.

The Chancellor says he is offering a stable foundation from which to weather the tempest, but at the same time adopting Ninja-like tactics of stealthily moving our taxes upwards via frozen allowances and forcing more people to complete tax returns.

But has he done enough to promote growth? Sharp tax rises (particularly in Corporation Tax) do not help business confidence and thus investment. Will we see an investment strike? If the economy slows down further, we might even see some U-Turns from the Chancellor in the Spring Budget.

Key points from the Chancellor's statement (more detail below)

Autumn Statement 2022: documents - GOV.UK (www.gov.uk)

Stability, growth and public services were the key pillars of the statement.

The Chancellor announced a continuation of frozen tax thresholds, dragging more people into paying tax and higher rates of tax. And more top earners will be paying 45% income tax (which is an astonishing turnaround from the Mini-Budget which had announced the abolition of the 45p rate).

There had been much speculation that Capital Gains Tax rates would increase and be aligned with those for income tax, but there was no announcement on this. Instead, the CGT tax-free allowance will be halved next year, which has a disproportionately greater impact on those making smaller gains and, for example, on employees in SAYE schemes who may now find themselves having to file tax returns and pay tax on their SAYE gains.

The Inheritance Tax nil rate band and Residence nil rate band are both frozen for a further two years until 5 April 2028 at £325,000 and £175,000 respectively. The Residence nil-rate band taper will continue to start at £2m. More fiscal drag.

The VAT registration threshold remains frozen until 2026 at least, dragging more businesses into the VAT net.

Whilst support for individuals and businesses with their energy bills will continue until April 2023, it will become less generous after that. But there will be more targeted benefits to help the most vulnerable.

Not mentioned by the Chancellor but covered in the Economic & Fiscal Outlook report from the Office for Budget Responsibility is a planned staggering 23% increase in the fuel duty rate in late-March 2023. The OBR report says at para 61:

"This would be a record cash increase, and the first time any Government has raised fuel duty rates in cash terms since 1 January 2011. It is expected to raise the price of petrol and diesel by around 12 pence a litre."

It's not surprising that the Chancellor didn't mention it, although the Treasury subsequently made clear that the forecast was subject to change before the Spring Budget.

As expected, there are increases in the National Living Wage from next April, but with double-digit inflation it is an effective reduction. And there was no increased help with the costs of childcare.

On vital R&D tax relief to encourage innovation, for expenditure on or after 1 April 2023, the R&D Expenditure Credit (RDEC) rate for large companies will increase from 13% to 20%, but the SME additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%. The government will consult on the design of a single scheme. These measures do nothing to stimulate growth through innovation.

See our separate article on the R&D Tax Changes.

There is no promise of a review of the Off-Payroll Working Rules, even though they were initially abolished in the Mini-Budget (and later reinstated by Hunt).

Brief recap – key changes previously announced: (see also our Predictions)

Personal tax thresholds, CGT IHT etc. limits all frozen until 2026
Corporation tax to rise from 19% to 25% from 1 April 2023 for profits above £250,000
The Annual Investment Allowance is set permanently at £1m (but the Super Deduction will end on 1 April 2023)
Check what Mini-Budget announcements have survived
Closure of the Office of Tax Simplification

Autumn Statement 2022 new key measures announced:

Taxes

From April 2023 the rate at which people pay the additional rate of income tax, charged at 45%, will change from £150k to those earning over £125,140 (the figure at which personal allowances are fully abated).
Personal tax thresholds will be maintained at current levels for a further 2 years, until April 2028 to strengthen public finances. 
National Insurance thresholds will be frozen, and the Employment Allowance will be kept at £5,000. - see our separate article
Tax free allowance for capital gains will reduce in 2023--24 from £12,300 to 6,000 and again to 3,000 in 2024-25.  The limit above which gains must be reported to HMRC, regardless of whether there is tax to pay, rises to £50,000 of proceeds from April 2023.
From 2025, Vehicle Excise Duty (VED) will be introduced for electric vehicles   Support for charging infrastructure is continuing.
Stamp Duty Land Tax cuts announced in the Mini-Budget Growth Plan will now be time-limited, ending on 31 March 2025. 
The tax-free dividend allowance will be reduced to £1,000 in 2023-24, and then to £500 in 2024-25.
Married Couple’s Allowance and Blind Person’s Allowance increased by 10.1% for 2023-24.
The annual ATED charge will rise by 10.1% for 2023-24.
The Energy Profits Levy is being increased & will be extended. There will also be a temporary tax on proceeds from electricity generators. 
Business rates revaluation will happen next year, but there will be a new £13.6bn package of business rates support. 
Business rates relief for retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% up to £110,000 per business in 2023-24.
As regards council tax, local authorities in England will be given more scope to increase bills above 2.99%.
New Capital Gains Tax avoidance: 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.
Inheritance Tax nil rate band and Residence nil rate band (RNRB) both frozen until 5 April 2028 at £325,000 and £175,000 respectively. The RNRB taper will continue to start at £2m.
Changes announced in the appropriate percentage for company cars for 2025/26 through to 2027/28.

Spending

Government spending will continue to increase in real terms every year for the next 5 years but at a slower rate. 
Defence spending will continue at 2% of GDP until there is a review next year.
£280m will be invested to help the DWP to crack down on benefit fraud and errors in the next two years.
A review of the UK's skills and training programme to be undertaken
The budget for schools will be increasing by £2.3bn next year & £2.3bn the year after - taking the core schools budget to a total of £58.8bn.   
Up to £2.8bn in 23-24 & £4.7bn in 24-25 for Adult Social Care.
A nuclear powerplant at Sizewell C to go ahead
A new energy efficiency taskforce aims to save people, businesses and the public sector money on energy bills, and will be backed by £6bn in new funding. 
Round 2 of the Levelling Up Fund will invest at least £1.7bn in local projects across the UK, including a new elected mayor for Cornwall with new financial backing to boost growth in the county
The building of new infrastructure such as roads, train lines and communities will be safeguarded by over £600bn in capital investment over the next 5 years.  
Changes in EU regulations to be announced next year to boost innovation
New powers to tackle monopolies
Import tariffs on some imported goods to be scrapped
Investment zones to be re-focussed on key universities
Post-Brexit reforms of Solvency II will unlock tens of billions of pounds in investment by UK insurance companies.
R&D investment: The government is protecting 20bn in Research & Development investment in 2024-25, as well as reforming Tax Credits, but the SME Tax Credit rates will be less attractive in future.
The Government will cap rent increases in the social rented sector under inflation next year, at 7%. 
To support vulnerable households following changes to the Energy Price Guarantee, further Cost of Living Payments will be made next year.  The Government will also provide a further £1bn to enable an extension to the Household Support Fund over 2023-24
The National Living Wage will see its largest ever cash increase, and all National Minimum Wage rates will also receive a boost from April 2023.  See our separate article.
Working age benefits will rise by the rate of inflation at 10.1% and the household benefit cap to be increased from April 2023.  
To help people with rising interest rates, homeowners on Universal Credit will be able to apply for Support for Mortgage Interest loans after 3 months instead of 9 months, including those in employment.  
The Pensions Triple Lock and Pension Credit will be protected and rise in April 2023 by 10.1%.  (See Benefit and Pension rates 2023/24)

Autumn Statement documents

Tax Tables 2022/23

Revised and updated tax tables for year 2022/23

Finance Bill 2022-23

Finance Bill 2022 was published on 22 November 2022 (see summary of the Bill), with more detailed measures likely to appear in the Spring Finance Bill 2023 following the Spring Budget.

Finance Bill 2022-23 documents. A Spring Finance Bill 2023 will be published
Finance Act 2022 received its Royal Assent on 24 February 2022.

UPDATE NOTE: Finance Act 2023 received Royal Assent on 10 January 2023. It was originally entitled ‘Finance (No 2) Bill 2022’. A further Finance Bill, covering draft measures published in July 2022, will be published following the Budget Statement on 15 March 2023.