After a “difficult” few weeks, our relatively new chancellor has now announced the latest budget (hopefully the last of 2022) with the aim of tackling the cost of living and rebuilding the economy.

He has three main aims: Stability, Growth and Public Services.

Set out below are our highlights of how he plans to do that.

CBW’s considered analysis will be available shortly.

Personal Tax

• As expected, the threshold for paying the 45% tax rate will fall from £150,000 to £125,140. Higher earners will go straight from losing their personal allowance to paying the additional rate tax, which will cost those earning more than £150,000 an additional £1,200 per year, around the same that the (scrapped) NIC increase would have cost for many tax-payers.
• The Tax-Free Dividend allowance will fall from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
• Other income tax thresholds and allowances remain unchanged for the next two years, so that with pay increases, more tax will be paid by more people sooner.

Capital Gains Tax

• The Annual Exempt amount of £12,300 will fall to £6,000 from April 2023, and to £3,000 from April 2024, costing up to an additional £1,764 and £2,604 respectively each year. Those using their annual allowances may need to reconsider their planning strategies.

IHT

• No changes will be made to the rates and allowances that currently apply. With house price increases, more IHT will ultimately be payable.

Employment Taxes

• No changes to NIC rates, and the NIC threshold for employers will remain at £9,100 until April 2028. Again, more NIC will be collected sooner with wage increases.
• The £5,000 Employers allowance will remain in place.

Corporation Tax

• The additional deduction for expenditure on SME R&D qualifying costs after April 2023 will be reduced from 130% to 86% and the SME credit will reduce from 14.5% to 10%. However, the R&D credit rate will increase from 13% to 20%. The impact on loss making companies is a lot more significant than those already making profits.
• The proposed 25% CT rate is expected to remain for all but the smallest companies.

VAT

• The VAT registration threshold will be maintained at £85,000 until March 2026. With inflationary increases in turnover, more businesses will be caught by this sooner.

SDLT

• Previous SDLT cuts announced in the mini budget will continue until March 2025, with the aim of providing the help needed now, but not forever.

Other

• From 2025, electric vehicles will be subject to vehicle excise duty and road taxes.
• The way multinationals pay their tax will continue to be reformed so that they paid their “fair share” of taxes here in the UK.
• Windfall taxes will temporarily be applied in the form of an Electricity Generator Levy at a rate of 45% from 1 January 2023.
• Properties will be revalued for Business Rates purposes from 1 April 2023, but transitional reliefs will be applied over five years to ease the burden.
• The Energy Price Guarantee will be maintained, but with an increase to £3,000 from April 2023. The most vulnerable households will be entitled to an additional cost of living payment of £900, pensioner households £300 and disabled individuals £150.
• State pension and other benefits will be increased with inflation by 10.1%, although the state pension age will again be reviewed.
• Import tariffs will be reduced on hundreds of goods used in processes in the UK.
• National Living Wage to increase to £10.42 per hour from April 2023.

Watch this space for CBW’s and Robert Maas’ full Budget Book.