Income Tax & National Insurance
National Living Wage will increase 9.7% in April 2023 from £9.50 per hour to £10.42 per hour which represents an annual increase for a full time worker of £1,600.
The Chancellor has reduced the income tax additional rate threshold from £150,000 to £125,140 which will increase taxes for people on high incomes from April 2023.
Income tax, National Insurance and Inheritance tax thresholds will be maintained at their current levels until April 2028 which is a further two year freeze on top of the existing four year freeze.
Until April 2028 the thresholds will be:
Inheritance Tax – £325,000
Personal allowance – £12,570
National Insurance – Primary threshold £12,570, Secondary threshold £9,100 and Upper Earnings Limit £50,268.
The Chancellor Jeremy Hunt says “The changes still leave Britain with more generous allowances than several other leading nations” and “changes will still leave the UK with the most generous tax-free allowances of any G7 country” adding that tax will increase by just 1% over the next five years.
The Chancellor also announced that electric vehicles will no longer be exempt from vehicle excise duty from 2025 as he looks to make motoring taxes “fairer”. At present electric vehicles are exempt from vehicle excise duty. Mr Hunt said: “Because the OBR (Office for Budget Responsibility) forecasts half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then, electric vehicles will no longer be exempt from vehicle excise duty.”
Dividend rates have been halved by Chancellor Jeremy Hunt in today’s Autumn Statement. The dividend allowance will be cut from £2,000 to £1,000 from April 2023. From April 2024, it will be reduced further to £500.
Capital Gains Tax
The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 from April 2023. It will then be dropped further to £3,000 from April 2024.