You are here: Home - Household Bills - News -

Autumn Statement: Everything you need to know at a glance

0
Written by: Anna Sagar
18/11/2022
Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measures and spending cuts to meet the three priorities of “stability, growth and public services”.

A squeeze on income tax, a rise in the National Living Wage, frozen thresholds for Inheritance Tax (IHT), and changes to Capital Gains Tax (CGT) and dividend tax were just a few of the announcements in yesterday’s Budget.

Below are 14 takeaways:

1) CGT exemption more than halved

The Chancellor said the annual exempt amount for CGT would be more than halved from £12,300 to £6,000 from April next year.

This will then fall to £3,000 from April 2024, which financial experts said “could hit investors hard”.

2) Council Tax

Local authorities are to gain more Council Tax (CT) flexibilities to increase funding for the social care sector.

Currently, CT includes a referendum threshold for increases at 2%. But social care authorities can also levy a maximum 1%.

However, the Government confirmed it will allow local authorities in England to set CT by increasing the referendum limit for increases in council tax to 3% per year from April 2023.

Meanwhile local authorities with social care responsibilities will be able to increase the adult social care precept by up to 2% per year.

3) Dividend tax allowance reduced to £1,000

Hunt made amendments to the amount you can earn before paying tax on dividends, falling from £2,000 to £1,000 from April next year.

The move was widely predicted by industry commentators as they warned the cut in the allowance was likely to hurt the self-employed and those who hold assets outside of tax-free wrappers such as ISAs.

4) Electric car owners to pay ‘road tax’

The Chancellor confirmed electric car owners will no longer be exempt from paying Vehicle Excise Duty.

“To make our motoring tax system fairer, I have decided that from April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty,” Hunt said.

5) Energy Price Guarantee upped to £3,000

The Energy Price Guarantee will be extended for another year from April, with the average price of £3,000. It came into effect in October and capped average energy bills at £2,5000. Hunt said the additional support would amount to around £500 per household.

He also confirmed that the energy windfall tax on profits would rise from 25% to 35%.

6) Fuel duty

While nothing was mentioned by Hunt, independent forecasts from the Office for Budget Responsibility (OBR) suggested a 23% hike in fuel duty in March 2023, adding 12p a litre to the average cost of petrol and diesel. This would be the first rise since fuel duty was frozen back in 2011.

Hunt denied any decisions on this had been made, however.

7) IHT threshold frozen for extra two years

Hunt confirmed that the IHT threshold would be maintained until 2028, an additional two years on the previous deadline of 2026.

IHT is levied at 40% on estates worth more than £325,000. However, individual homeowners can pass on properties worth up to £500,000 completely IHT free.

This is because on top of the nil-rate band (up to £325,000), there is also a main residence nil-rate band standing at £175,000.

Some industry insiders said the freeze would mean more people would be dragged into paying IHT, while over-55s were urged to look at their allowances.

8) Income tax threshold frozen but minimum wage to rise

Hunt confirmed that the personal allowance, and income tax bands will be frozen for another two years until 2028.

However, he added there would be a cut to the threshold for additional rate of tax from £150,000 to £125,140. Experts said that eight million people will pay a higher rate of tax at 40%.

The government will also increase the National Living Wage to £10.42 an hour for workers aged 23 and over and National Minimum Wage rates would also rise.

9) Online Sales Tax idea dropped

The accompanying Budget documents revealed the government has decided not to introduce an Online Sales Tax following consultation. It noted the decision reflects concerns raised about an OST’s “complexity” and the “risk of creating unintended distortion or unfair outcomes between different business models”.

Earlier this year, it launched a consultation on whether an OST could “level the playing field” between online retailers and the bricks and mortar retailers.

10) Pensions and benefits to rise 10.1%

The government confirmed it will increase working age and pension benefits in line with inflation, meaning 19 million families will see rates rise 10.1% from April 2023.

The Chancellor also confirmed the Pensions Triple Lock.

The Pensions Triple Lock guarantees the basic state pension will rise by the higher of average earnings, inflation or 2.5%. As it will rise by the inflation figure of 10.1%, some will see their pensions breach £10,000 a year for the first time.

11) Support for Mortgage Interest (SMI) wait period cut to three months

The wait period for SMI has been lowered from nine months to three months, in a move that Hunt said would help mortgage borrowers.

The zero earnings rules have also been abolished so claimants can continue to get support while in work and on Universal Credit.

SMI is a loan to help pay the interest on a mortgage or other home loans. It will help pay interest on up to £200,000 of your loan or mortgage subject to certain conditions, and the interest rate used to calculate SMI is 2.09% and the interest added to the loan is 1.4%.

12) Social housing rent increase capped

The annual increase in social housing rent has been limited to a maximum of 7% to protect tenants from the cost-of-living crisis.

Hunt said rents are currently set at 1% above September’s inflation rate meaning any increases would be in the realm of 11%.

He continued that this would save the average tenant in the social rented sector £200 next year and the overall saving to the government would be around £630m in the next five years.

13) Stamp duty cut to end in 2025

Hunt said that the increase to the stamp duty threshold to £250,000 introduced in the mini Budget by his predecessor would be scrapped in 2025. Hunt said that with the OBR predicting housing activity would fall in the next two years the stamp duty cuts would sustain activity during this period.

14) Universal Credit migration

Legacy benefits are due to be transitioned to Universal Credit claims by December 2024. However, yesterday it was revealed that the managed move of income-related Employment and Support Allowance (with the exception of those receiving Child Tax Credit) will be delayed to 2028.

Individuals are still able to move sooner if they feel they will be better off under UC, but benefits calculation firm Entitledto said it is best to get advice ahead of such a move, particularly for those with complex circumstances.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week