Here we are again, just 8 weeks after the last budget statement! Hopefully this one will make it through to implementation, but this time we are looking at tax hikes instead of tax cuts. Below are some of the important highlights in relation to tax, but the full statement can be found here.
Personal taxes
The point at which the 45% rate of income tax applies will be reduced from £150,000 to £125,140.
The allowances and bands for income tax and national insurance will be frozen until April 2028, which effectively means more people will pay more tax, and at higher rates, as a result of increasing wages and inflation.
The tax free dividend allowance will be reduced from £2,000 to £1,000 next year, and then to £500 from April 2024.
The Capital Gains Tax annual exemption amount is to reduce from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024.
Business taxes
As announced previously, the original planned changes to Corporation Tax will now go ahead, meaning that from April 2023, the new tax rate will be 25%, but to help protect small businesses a £50,000 small profits rate will be introduced, set at the current rate of 19%. Once a company’s profits rise above £50,000 a taper will apply, so that only businesses with profits above £250,000 will have to pay the full 25% rate.
Employers’ NIC thresholds are to be frozen, and the Employment Allowance remains at £5,000 per year.
The VAT threshold to remain at £85,000 for 2 years.
