AUTUMN STATEMENT 2022

This morning, the Chancellor of the Exchequer delivered his long awaited and much delayed Autumn Statement.

As expected, there was not much give away in the statement, this is a budget of freezes, cuts to public expenditure and rises in taxes. Against the backdrop of political instability, recession, pandemic recovery, a war in Europe and the overall hit to the UK economy of a badly managed Brexit we couldn’t have expected much else.

The following is a summary of the key announcements, many of which had been leaked or revealed in advance. If you would like to discuss any of these points in more detail please do so via the website or by calling 07966651293

PERSONAL TAXATION AND WAGES

• UK national living wage for people over 23 to increase from £9.50 to £10.42 an hour from next April
• State pension payments and means-tested and disability benefits to increase by 10.1%, in line with inflation
• Top 45% additional rate of income tax will be paid on earnings over £125,140, instead of £150,000
• Income tax personal allowance and higher rate thresholds frozen for further two years, until April 2028
• Main National Insurance and inheritance tax thresholds also frozen for further two years, until April 2028
• Tax-free allowances for dividend and capital gains tax also due to be cut next year and in 2024
• Local councils in England will be able to hike council tax up to 5% a year without a local vote, instead of 3% currently

ENERGY COSTS

• Household energy price cap extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
• Households on means-tested benefits will get £900 support payments next year
• £300 payments to pensioner households, and £150 for individuals on disability benefit
• Windfall tax on profits of oil and gas firms increased from 25% to 35% and extended until March 2028
• New “temporary” 45% tax on companies that generate electricity, to apply from January 2023

THE ECONOMY

• The OBR has announced that the UK is in recession, meaning the economy has slowed for two quarters in a row
• It predicts growth for this year overall of 4.2%, but size of the economy will shrink by 1.4% in 2023
• Growth of 1.3%, 2.6%, and 2.7% is predicted for 2024, 2025 and 2026
• UK’s inflation rate expected to be 9.1% this year and 7.4% next year
• Unemployment rate is expected to rise from 3.6% to 4.9% in 2024
• Government will give itself five years to hit debt and spending targets, instead of three years currently

PUBLIC SPENDING AND OTHER MATTERS

• Scheduled public spending will be maintained until 2025, but then grow more slowly than previously expected
• In England, NHS budget will increase by £3.3bn a year for the next two years, and spending on schools by £2.3bn
• It will mean larger payments to devolved governments in Scotland, Wales and Northern Ireland
• Defence spending to be maintained at 2% of national income – a Nato target
• Overseas aid spending kept at 0.5% for the next five years, below the official 0.7% target

• Lifetime cap on social care costs in England due in October 2023 delayed by two years
• Social housing rent increases capped at 7% from next April – instead of 11% due to inflation
• Electric cars, vans and motorcycles to pay road taxes from April 2025