Current Chancellor Jeremy Hunt announced budget plans in his recent Autumn Statement.
Our director, Asif Abubaker will provide a breakdown of what the new budgetary plans will mean for you.
Changes to personal & employment taxes
Income tax: In a move which means ‘those earning £150,000 or more will pay just over £1,200 extra a year’, the threshold for people paying the top rate of tax (45%) is to drop from £150,000 to £125,140.
The income tax personal allowance and the main National Insurance (NI) thresholds have also been frozen for a further two years to April 2028. The Employment Allowances for NI will be retained at the higher £5,000 level until March 2026.
Dividend tax: There is going to be a 50% reduction in the current dividend allowance (£2,000 to £1,000) from April 2023. The allowance will also drop by a further 50% to £500 from April 2024.
Capital Gains Tax (CGT): The Annual Exempt Amount for CGT on ‘chargeable assets’ will drop from £12,300 to £6,000 next year and then to £3,000 from April 2024.
Inheritance tax (IHT): The IHT rate has been frozen since 2009 and subsequently hasn’t kept pace with inflation. The current rate means 40% tax is due on estates over £325,000.
This threshold is staying in place until April 2028, with more people falling under the criteria for payment as a result.
Company cars: Electric vehicles (EVs) will no longer be exempt from Vehicle Excise Duty from April 2025. Also, company car tax rate increases will be limited to 1 percentage point per year for three years from 2025.
Changes to business taxes
Research & Development (R&D): The R&D tax relief for SMEs will see a deduction rate cut to 86% from 130%, as well as the credit rate being reduced to 10% from 14.5%.
There will, however, be an increase in the rate of the separate R&D expenditure credit from 13% to 20%.
Corporation tax: The corporation tax rate rise from 19% to 25% will go ahead as planned next April.
Business rates: Representing a £14bn tax cut over the next five years, nearly two-thirds of properties will not pay any extra business rates next year.
VAT threshold: The current VAT registration threshold of £85,000 to stay in place until March 2026.
Tariff suspensions: Tariffs will be removed on over 100 goods for two years.
The measure will remove tariffs as high as 18% on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.
For further information, please contact Asif Abubaker on 01924 461236, or email asif.abubaker@kingswellwatts.co.uk.
