Chancellor Jeremy Hunt announced his Autumn Statement yesterday. It followed warnings that taxes would increase and spending would be cut. The measures taken aimed to tackle soaring inflation (11.1% in October – a 41-year high) and the cost of living crisis.
Here are the key changes:
Tax
- Income tax and national insurance thresholds are to be frozen for a further two years, until April 2028.
- Tax-free allowances for dividends will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.
- Capital gains tax will be cut to £6,000 next year and then to £3,000 from April 2024. (The annual exempt amount for capital gains tax is currently £12,300.)
- The threshold for the 45% rate of income tax that applies to the highest earners has been decreased from £150,000 to £125,140.
Pensions
- Pension triple-lock protected. The chancellor said he will increase state pensions by 10.1% in line with inflation in April 2023, in what he said would be the “biggest ever cash increase in the state pension.” This increase also applies to means-tested and disability benefits.
National Living Wage
- The national living wage is the UK hourly minimum wage, which employers legally must pay to employees aged 23 and above. This will rise from £9.50 an hour to around £10.42.
National Spending
- The NHS budget is to increase by an extra £3.3 billion in each of the next two years.
- An extra £2.3 billion per year will be invested in schools over the next two years.
Energy
- Household energy price cap extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
- New 45% tax on companies that generate electricity, to apply from January
How do the recent changes affect you?
Is your business impacted by the Chancellor’s announcement?
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