FINANCE
Statement – Trevor Cook says the government ’ s new budget plan aims to plug a major hole in public finances . the freezing of the thresholds was announced back in 2021 .
The amount each individual can earn tax-free in dividend income each year is to be halved from April 6 2023 to £ 1,000 and halved again from April 6 2024 to £ 500 . The reduction of this allowance , together with the increases to dividend tax rates , means business owners are facing much higher tax liabilities on the extraction of business profits .
Mr Hunt has also slashed the annual Capital Gains Tax exemption from £ 12,300 to £ 6,000 with effect from April 6 2023 . It will then be halved to £ 3,000 from April 6 2024 . This is a controversial , if not unexpected , move .
Since the indexation allowance was abolished , taxpayers have been taxed on inflationary gains for many years and the further reduction in the annual exemption will be seen by many investors as another kick in the teeth , as they will be taxed on gains that are simply keeping pace with inflation .
While it was rumoured that there would be increases in the headline Capital Gains Tax rates , this did not materialise , and there is now a greater incentive for business owners to generate capital gains rather than income where possible .
For expenditure on or after April 1 2023 , the research and development expenditure credit ( RDEC ) rate will increase from 13 per cent to 20 per cent , but the small and medium-sized businesses ( SME ) additional deductions will decrease from 130 per cent to 86 per cent and the SME credit rate will decrease
The new budget plan aims to plug a major hole in public finances by increasing taxes and cutting spending .
from 14.5 per cent to 10 per cent .
While the increase in the RDEC rate will be welcomed by large businesses , many SMEs will be disappointed by the reduction in small company relief .
The government continues to incentivise the take-up of electric vehicles and the autumn statement announced two key measures affecting those with electric vehicles :
> From April 2025 there will be a requirement to pay vehicle excise duty ( road tax ); and
> The rates of benefit in kind tax will be increased at one per cent per annum from April 2025 .
While electric car ownership is part of the transition to carbon net zero , the rates of company car tax are still much lower than those on petrol and diesel vehicles . According to the government , the new measures will ensure that all road users begin to pay a fair tax contribution as the take up of electric vehicles continues to accelerate .
Increased living costs have been widely commented on in the press over the past months , and we are sure the confirmation that the government will increase benefits , including the state pension , in line with inflation will be welcomed by many .
The government will also provide households on means-tested benefits with an additional £ 900 cost-of-living payment in 2023 / 2024 . Pensioner households will receive an additional £ 300 and individuals on disability benefit will receive an additional £ 150 .
There is also an increase in the national living wage and national minimum wage with effect from April 1 2023 . This represents an increase of over £ 1,600 to the annual earnings of a full-time worker on the national living wage and is expected to benefit more than two million low-paid workers .
While increases in tax rates are never welcomed , the autumn statement is all about settling nerves after the September mini-budget .
The new chancellor took a balanced approach to strengthening public finances by introducing a number of moneyraising tax measures to accompany some infrastructure investments , with the aim of stimulating growth .
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The voice of business in the Tees region | 147