17 November 2022

Today’s Autumn Statement was very much targeted at the financial markets with a view to providing credibility and stability to the UK’s public finances, which is not surprising given the fallout from the recent mini-budget and the fact that Jeremy Hunt is the 4th Chancellor in just over 4 months!

Austerity 2.0 has been mentioned a lot in the run up to today’s Statement and everyone will have their own view on this, but with £55 billion being clawed back by the government through a combination of significant tax rises and spending cuts there is no doubt that 2023 is going to be a very challenging year for both households and businesses.

It is good to see the return of the OBR’s independent report accompanying the government’s Statement. Whilst this confirms the challenging outlook in that the UK economy will shrink by 1.4% in 2023, there are some positives with growth forecast to increase in 2024 by 1.3% and to exceed 2.5% in 2025 and 2026.

Jeremy Hunt rightly announced that the current high rate of inflation is his number one target in the short term and again there are signs for optimism beyond 2023, because the OBR’s report forecasts inflation dropping dramatically to 0.6% in 2024 and actually becoming negative (-0.8%) in 2025.  This should all help to alleviate the pressure on interest rates which will be very much welcomed by both businesses and homeowners.

As expected, there was no increase in income tax rates, but the Chancellor did announce the freezing of tax thresholds for a further two years to April 2028. This will generate a significant amount of additional tax revenues, particularly with earnings currently rising at an average rate of 5% through the so-called effect of fiscal drag.  The headline grabbing tax announcement today (particularly given that we have a Conservative government) is the lowering of the 45% income tax threshold from £150,000 to £125,140, which will result in an extra 232,000 individuals paying the top rate of income tax.

The government naturally have one eye on the next general election in two years and announced a 10.1% increase in state pensions and benefits, which keeps their manifesto pledge and reinforces the compassionate approach that they have been keen to portray in recent weeks.

Hopefully today finally sees the last day of new tax announcements for 2022, but to quote Harold Wilson “a week is a long time in politics” and given that we still have 6 weeks to go, it is quite possible that we may be reporting to you again before we see 2023!

The Autumn Statement 2022 announcement contains the following topics:

  • Income Tax & NIC
  • Corporation Tax
  • Business rates
  • Capital allowances
  • Capital Gains Tax
  • VAT
  • Benefits in Kind
  • Stamp Duty Land Tax
  • Investment Zones
  • Research & Development
  • IR35 update - The 2017 and 2021 reforms to the off-payroll working rules – also known as IR35 – will be maintained.

Please click here to read and download our Autumn Statement 2022 highlights.

If you have any queries on the Autumn Statement 2022 please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466.