With the Bank of England warning that the country is on the brink of recession, the pressure is on the new Prime Minister, Rishi Sunak, and the new Chancellor of the Exchequer, Jeremy Hunt, to make the right decisions for the UK economy.
What is the Autumn Statement?
The Autumn Statement is the government’s ‘medium-term fiscal plan’, which will specify the country’s economic policies for the foreseeable future. It will be accompanied by economic forecasts from the Office for Budget Responsibility.
The main aims of the plan will be to fill the UK’s fiscal deficit (estimated between £40-£50 billion) and boost economic growth.
When is the Autumn Statement 2022?
The Autumn Statement 2022 will be announced by the Chancellor of the Exchequer to the House of Commons on Thursday 17th November (time to be confirmed).
What changes have been announced so far?
In an emergency statement on Monday 17th October – Jeremy Hunt’s first public announcement as Chancellor of the Exchequer – it was announced that there would be significant changes to the policies detailed in the Mini Budget.
These changes included:
- The Basic Rate of income tax would remain at 20% ‘indefinitely’ rather than decreasing to 19% in April next year
- Cuts to dividend income tax rates would no longer go ahead as planned
- IR35 off-payroll working reforms (introduced in 2017 and 2021) would remain in place
- VAT-free shopping scheme for non-UK visitors would be scrapped
- Freeze on alcohol duty rates would be scrapped
- The Energy Price Guarantee will expire in April 2023 rather than last two years, with a review taking place to establish the level of support that should continue beyond this date
What changes could be announced in the Autumn Statement 2022?
There has been a lot of speculation surrounding the contents of the Autumn Statement. Aside from the changes shared during the emergency statement in October, no actual policies have been confirmed by the UK government.
The Autumn Statement has been an ongoing discussion across our tax division and our tax partners have their own theories about what changes could potentially be made. From freezes to reversals, here are some of the policies that could feature in the UK’s upcoming budget:
| Potential policy | Potential impact |
| Reduction in VAT rate | A lower VAT rate would hopefully boost consumer spending and decrease inflation rate |
| Freezing of income tax thresholds for a prolonged period of time | Frozen thresholds will eventually lead to more workers becoming eligible to pay higher rates of income tax |
| A variation of the health and social care levy to return | Re-introducing some form of health and social care levy would mean more funds for the NHS but less disposable income for taxpayers and a greater cost for businesses |
| Increase in Capital Gains Tax rates and amendment to Capital Gains Tax free uplift on assets at death | Increasing CGT rates would have a negative impact on businesses and investors. An amendment to CGT free uplift on death could mean that a bereaved person’s assets become liable for CGT. |
| Abolition of Business Asset Disposal Relief | If the Business Asset Disposal Relief is abolished, it would result in businesses paying more CGT and could discourage growth and investment |
| Abolition or reduction of the £2k dividend allowance | Abolishing or reducing the current dividend allowance would mean that all business shareholders, from company directors to employee shareholders, pay more dividend tax. It would also mean that people with annual dividends beneath the £2k threshold would become eligible to pay dividend tax. |
| Further increase in dividend income tax rates | Increasing dividend income tax rates would affect all business shareholders |
| Reversal of recent changes to Stamp Duty Land Tax | The Mini Budget planned to increase the Stamp Duty Land Tax threshold from £300,000 to £425,000 for first-time buyers and from £125,000 to £250,000 for all buyers. If these changes are reversed, it could discourage some people from buying residential property. |
| Increase or extension of temporary windfall tax for oil and gas companies on profits from extracting oil and gas | An extension would mean that energy companies would have to continue paying higher tax on profits earned from extracting UK oil and gas, while an increase would mean they have to pay more. The current rate is 25%. |
| Some form of wealth-associated tax | Higher earners may be negatively impacted by the introduction of a wealth-associated tax |
| Abolition of ‘Non-dom’ status | ‘Non-domicile’ tax status applies to UK residents whose permanent homes are abroad and gives exemption from income tax. Abolition of this status could lead to the people affected leaving the country. |
| Removal or reduction of certain tax reliefs, such as basic rate relief on pension contributions | Removing or reducing tax reliefs would leave many people liable to pay greater amounts of tax at a time when individuals are struggling financially as a result of the cost of living crisis |
| Increase the National Minimum Wage | Increasing the National Minimum Wage would help low income workers amidst the challenges of the cost of living crisis, but it would also increase staff costs for employers |
| Lower the threshold for the 45% additional rate of income tax | If the government lowers the threshold for the highest rate of income tax, more taxpayers would become eligible to pay 45% rather than the higher rate of 40% |
The changes listed above are of course speculative and the actual policies will not be disclosed until the Autumn Statement 2022 on Thursday 17th November.
For more in-depth advice and guidance on recent and potential changes to UK economic policy, contact us today to talk to one of our tax experts about how your business could be affected.
