Reactions to the Chancellor’s 2022 Autumn Statement
November 17, 2022
On Thursday 17 November, the Chancellor delivered his 2022 Autumn Statement today against a backdrop of significant economic challenges for the UK and global economy, acknowledging that the UK economy is in recession (economy forecasted to shrink by 1.4% in 2023).
With the government’s key priorities being stability, growth and public services, having already reversed nearly all the measures in the Growth Plan 2022, the Chancellor announced a number of tax rises and spending cuts with the aim of helping to rebuild the economy and reduce debt.
We have highlighted below some of the tax announcements of most relevance to Channel Island businesses:
Income Tax
The income rates (20%, 40% and 45%) together with the tax personal allowance and the higher rate threshold, are to remain unchanged until at least April 2028. However, the income tax additional rate threshold (at which the 45% rate applies) is to be lowered from £150,000 to £125,140 from 6 April 2023.
The reduction in the 45% additional rate threshold will impact on the income tax rate paid by certain UK/non-UK individuals, and certain trusts, on UK property income.
In addition, the Dividend Allowance available to UK resident individuals is reducing from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
Corporation Tax
As per previous announcements, the rate of Corporation Tax will increase from 19% to 25% from 1 April 2023, as originally planned. No further changes to the rate were announced today.
Capital Gains Tax (CGT)
The Chancellor has retained the headline rate of CGT but has reduced the CGT Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
This change will impact UK and non-UK resident individuals, who may be subject to capital gains tax on direct and certain indirect disposals of UK property.
Stamp Duty Land Tax (SDLT)
On 23 September 2022, the Chancellor announced a reduction in SDLT for certain residential property acquisitions.
Firstly, the residential nil-rate tax threshold was increased from £125,000 to £250,000. In addition, the nil-rate threshold for First Time Buyers’ Relief was increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief was increased to £625,000.
Although the September announcement indicated that these changes would be permanent, the Chancellor has today advised that the cuts will now be temporary, and will only remain in place until 31 March 2025.
No changes were announced to the existing 3% additional dwelling supplement or the 2% foreign buyers surcharge which will continue to apply to residential property acquisitions.
Capital Allowances
The September announcement that the Annual Investment Allowance (AIA) would be permanently set at £1m has been reconfirmed. The AIA is an annual 100% allowance for investment in qualifying plant and machinery (up to that limit) per company, or where relevant, group of companies, groups of companies under common control, and other ‘related’ companies under common control.
Tax avoidance, evasion and non-compliance
A package of measures to tackle tax avoidance, evasion, and wider non-compliance will be announced to support the government’s actions to repair the public finances.
It was also announced that the UK will implement the OECD Pillar 2 rules for a global minimum corporate tax rate, for accounting periods beginning on or after 31 December 2023.
Channel Islands impact
In terms of a Channel Islands impact, the Autumn Statement did not offer any major announcements affecting Channel Island individuals and businesses given the earlier tax reversals announced since the 2022 growth plan. However, it is worth noting some of the announcements for individuals and businesses investing in UK real estate; confirmation of the AIA at £1m, reduction in the CGT Annual Exempt Amount and the income tax additional rate threshold.
The announcement of the UK implementing the OECD Pillar 2 rules from 31 December 2023 is also interesting from a Channel Island’s perspective and it remains to be seen whether this will impact the Channel Island implementation timeframes.
If you have any questions or would like to discuss any of the areas we covered in more detail, please do get in touch with your usual PwC tax contact or with one of the below directly.
Contact us
