The economic stability of any country depends on fiscal sustainability, and the Autumn Statement outlines the UK government’s aim to reduce the national debt over the medium term. In the last blog post, we discussed the impact of the Autumn Statement on UK businesses. But how does it actually affect UK individuals? What points should they have to keep in mind? Let us explore:
The triple lock is a government commitment typically used for deciding how much the value of the state pension will increase in the new tax year. The state pension triple lock was suspended in 2022 and it will continue to remain suspended in 2023, giving pensioners a 10% uplift in their state pension payments from April.
2. Income tax
The personal allowance and higher rate threshold will be frozen until April 2028. The basic tax rate (£12,571 to £50,270) will continue to be 20%. The additional rate threshold will drop from £150,000 to £125,140 in 2023.
This will add £1,392 for those whose income is subject to this tax band. Also, national insurance rates have been frozen until 2028, not 2026 – as previously announced. In other news, the additional 1.25% National Insurance (NI) surcharge has been reversed.
3. Dividend tax
From April 2023, the yearly dividend amount will be reduced from £2,000 to £1,000. It will then be reduced again to £500 from April 2024. The basic dividend tax rate is currently parked at 8.75%, with the higher rate at 33.75%. The additional rate of 39.35% remains unchanged.
4. Energy support
The Energy Price Guarantee (EPG) remains in effect as is. From April 2023, some people may have to pay extra. This is because offering the energy support will cost £55bn to the UK government this winter. Given the government’s finances, that is unsustainable.
Secondly, the EPG cap will increase in April 2023, reflecting the surge in energy prices. Needless to say, the average household bill will rise from £500 to $3,000.
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5. Inheritance tax
Inheritance tax nil rate bands are frozen at their current rates until 2027-2028. As asset values rise, more estates will be drawn into IHT. Interestingly, the standard nil rate band (£325,000) has not changed since April 2009!
6. Electric Vehicles (EVs)
Electric car owners must pay Vehicle Excise Duty (VED) starting in April 2025. New zero-emission cars registered after 1 April 1, 2025, will cost £10 to the owners in the year. From the second year of registration onwards, they will have to pay £165 yearly. Zero-emission automobiles registered between 1 April 2017 and 31 March 2025 will pay the standard annual rate starting 1 April 2025.
7. Capital Gains Tax (CGT)
From April 2023, the CGT threshold you pay will drop from £12,300 to £6,000. From April 2024, it will be reduced to £3,000. Those worried about CGT on the disposal of assets should look for other forms of ownership or carefully assess the timing of such disposals.
Additionally, the CGT reporting limits have been fixed at £50,000 from April 2023. The 3-year nil-gain, nil-loss transfers between spouses at the time of separation has been extended to three years.
The transfers are limited if the assets are subject to a formal divorce agreement. Formerly married spouses might claim this exemption until the end of the tax year of separation.
8. Stamp Duty Land Tax (SDLT)
- The residential zero-rate band threshold drops from £250,000 to £125,000.
- The first-time buyer relief nil rate band drops from £425,000 to £300,000.
- When leveraging first-time buyer’s relief, the maximum purchase price will come down from £625,000 to £500,000.