Autumn Statement 2022 – A Taxing Time
The Chancellor has taken more tax, but not as much as we had feared
In his Autumn Statement today the Chancellor has taken more tax, but not as much as we had feared. The top rate of income tax stays at 45% and the tax increase is taken by lowering the threshold at which that 45% tax rate kicks in.
This will be on income above £125,140 resulting in an increase in the tax burden of £1,250 for the highest earners.
The key hurdles then become:
- Income above £37,700 is taxed at 40%
- Income above £100,000 starts to lose the personal allowance on the first slice of £12,570 income tax free
- Income above £125,140 is taxed at 45%
The Chancellor did not announce any changes to dividend tax rates, so we expect they will remain in line 2022/23 as follows:
- Dividend Income above £37,700 taxed at 33.75%
- Dividend Income above £125,140 taxed at 39.35%
However, the tax free dividend allowance falls from £2,000 to £1,000 for 2022/23, to £1,000 for 2023/24 and to £500 for 2024/25.
Of course dividends captured in ISA’s and pension funds are tax free.
Company Directors / Shareholders will need to look at the numbers to calculate the most efficient way of paying out income to reward their efforts.
There were no changes announced today to Inheritance Tax. The only change in respect of Capital Gains Tax is a reduction in the annual allowance, which falls from £12,300 for 2022/23 to £6,000 for 2023/24 and to £3,000 for 2024/25.
As it stands high net worth individuals will not see any significant capital taxes changes. It remains important to consider IHT and CGT planning as a key part of your financial strategy. If you require more information, please do contact us.