Well, quite a bit has changed since the last Mini Budget email, hasn’t it? The latest Chancellor has used his Autumn Statement to calm a few nerves and attempt another reset of public finances. Most of his predecessor’s measures have already been reversed, and today he went further with some changes to taxation and other allowances. None of this has really come as much of a surprise but to follow is a summary of the key points which might affect you.
INCOME TAX
Income Tax rates for 2023/24 will remain at 20%, 40%, and 45%. The additional rate threshold will be reduced from £150,000 to £125,140 from 6th April 2023. This means that those already paying 45% tax will pay an extra £1,243 in 2023/24.
The personal allowance and basic rate band remain frozen at £12,570 and £37,700 respectively. The freeze has been extended by a further 2 years to April 2028. This means that the higher rate threshold will remain at £50,270 for those with a full personal allowance.
The Dividend allowance will be cut from £2,000 to £1,000 for 2023/24 and halved again to £500 for 2024/25. This means many more investors may have to complete Tax Returns if their dividend income exceeds £1,000 in 2023/24.
CAPITAL GAINS TAX
The annual CGT exemption of £12,300 will be cut to £6,000 from April 2023. This could mean an extra 235,000 individuals will need to file a tax return.
Surprisingly, there was no change to the rates of CGT.
INHERITANCE TAX
The freeze on both the nil rate band (NRB) and residence nil rate band (RNRB) has been extended for an additional two years.
The NRB will remain at £325,000 and the RNRB at £175,000 until April 2028.
NATIONAL INSURANCE
The main National Insurance thresholds have also been frozen for a further 2 years, until April 2028.
CORPORATION TAX
Corporation Tax will rise to 25% from April 2023 as originally planned. Small companies with profits below £50,000 will continue to pay at the current rate of 19%. There will also be a reintroduction of tapering relief for businesses with profits between £50,000 and £250,000 so that they pay less than the main rate.
VCT AND EIS
There was also some welcome reaffirmation of the Government’s support for the VCT scheme. The Chancellor appears to recognise the crucial role that high-growth, early-stage businesses play in the UK Economy and this is a positive commitment.
STAMP DUTY
The cuts to Stamp Duty will remain but only until March 31st 2025.
ELECTRIC VEHICLES
Electric cars, vans and motorcycles to pay road taxes from April 2025
As always, with careful planning, you can (and should) use up all the allowances available to you. These are becoming more and more important (and rare!) and so please do get in touch to make sure you are making the most of them.
This publication has been prepared for information purposes only by Carrington Investment Consultants Ltd t/a Carrington Wealth Management and does not constitute financial or investment advice. The value of investments, and any income generated from them, will be affected by interest rates, exchange rates, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which it invests. Investors should be aware that the value of units may well fall as well as rise, is not guaranteed and that past performance is not a guide to future performance. Different funds carry different levels of risk and investors may not get back the full amount invested.
