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The Chancellor, Jeremy Hunt, delivered his long-awaited remarks on the Autumn Budget to the House of Commons flat today. The key message of the statement was clear – the UK must get its financial condominium in order.
The chancellor has announced a series of tax rises and spending cuts as part of his plan to try to reduce the country's debt-to-GDP ratio by mid-decade.
The usual package of tax rises and spending cuts is designed to carry £55 billion to the general public purse.
here's a summary of the most critical changes. We'll be updating this webpage as the day goes on, so stay tuned for more!
Frozen tax brackets
The biggest change, and the one that could affect most people, is the freeze on tax deductions.
Hunt is freezing all income tax thresholds except 2028. That could drag more people into better, higher income tax brackets as wages rise.
The Chancellor is also freezing the zero-cost band for inheritance tax. This could mean more properties paying the tax as asset values increase.
Despite these changes, Hunt still believes the UK has one of the “most generous tax allowances of any G7 nation.”
45p income tax threshold reduced
Hunt made it clear in the funds that he may be asking “those with more to make more contributions.”
To this end, he reduced the threshold at which the 45p fee becomes payable from £150,000 to £125,140.
this can drag extra taxpayers into the additional cost bracket. These taxpayers will now face an extra £1,200 a year in standard income tax.
Dividend allowance and capital upside should be cut
those with investments will also be asked to pay more.
Hunt is planning to get rid of tax relief on dividends, which is currently £2,000 a year.
this will fall to £1,000 in the next tax year, after which £500 for the 2024-2025 tax year. The dividend income tax costs on these deductions will remain unchanged. The fundamental cost of dividend income tax is 8.75%, the best expense is 33.75%, and the extra price is 39.35%
the threshold for paying tax on capital beneficial properties has been halved from £12,300 to £6,000 for the 2023-2024 tax year. It could be reduced once again to £3,000 in the 2024-2025 tax year.
“Capital assets tax is paid when Americans sell or gift devices priced above £6,000, such as antiques or paintings, or assets including second homes and shares held in the backyard of an ISA or PEP. Capital goods tax introduced on £14.3 billion in 2020-21 tax year from 323,000 people.
“Anyone who is involved may be liable to pay capital gains tax may also want to consider timing the 'disposal' of their property or property options, for example by holding buy-to-let investments in a restricted business structure ,” Chris Liebetrau, tax planner at Nutmeg, the aforementioned digital wealth tracker.
Pensions triple lock
Pensioners can also breathe a sigh of relief as Hunt has proven the executive will maintain its commitment to the state pension triple lock.
He noted: “I will announce in these days that we will fulfill our promise to the nation to give protection to the pensions triple lock. So in April the state pension will rise in line with inflation, an increase of £870 that represents the biggest ever cash increase in the state pension.
Considering this could also come as a help to many, with the freezing of tax bands it could also allow extra retirees to find themselves having to pay taxes too.
“A common consequence is that extra retirees become liable for payroll tax. As the total state pension value of £9,600 approaches the personal allowance of £12,570, pensioners who have another source of salary beyond their state entitlement may also find themselves paying income tax,” said Nutmeg's Liebetrau.
