2022-11-18-KPMG_Global-United_Kingdom_–_No_Radical_Departures_in_Autumn_Statement_2022_6页_290kb

Summary of the Autumn Statement 2022: United Kingdom

Core Content

The Autumn Statement 2022, delivered by Chancellor Jeremy Hunt on 17 November 2022, outlines key tax and National Insurance (NIC) changes that will affect globally-mobile employees and their employers. The statement emphasizes stability, growth, and public services as its main priorities, and it avoids introducing radical changes to the personal tax regime.

Main Tax Changes

Personal Income Tax Rates and Thresholds

• The personal allowance remains at £12,570 for the 2023/24 tax year.
• The basic rate threshold is unchanged at £0 - £37,700.
• The higher rate threshold is reduced from £150,000 to £125,140 starting from April 2023.
• The additional rate threshold is also reduced from £150,000 to £125,140, with the additional rate tax of 45% applying to income above this level.
• The freeze on personal allowance and higher rate thresholds was extended from 2022 to 2028.

Capital Gains Tax

• The tax-free capital gains tax allowance is reduced from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024.
• The capital gains tax rates remain unchanged:
  • Basic rate: 10% for other gains, 18% for property gains.
  • Higher/additional rate: 28% for both property and other gains.

Dividend Allowance

• The dividend tax-free allowance is reduced from £2,000 to £1,000 from April 2023, and then to £500 from April 2024.
• Dividend tax rates remain the same:
  • Basic rate: 8.75%
  • Higher rate: 33.75%
  • Additional rate: 39.35%

National Insurance Contributions (NIC)

• Class 1A, 1B, and employer NIC for directors subject to an annual earnings period will revert to 13.8% for the 2023/24 tax year.
• Class 1 employee NIC rates remain unchanged for 2023/24:
  • 12% for earnings between the annual threshold (£12,570) and the upper earnings limit (£50,270).
  • 2% for earnings above the upper earnings limit.
• The NIC thresholds are frozen until April 2028.

Other Measures

• Pension contributions: No changes were announced. The pension annual allowance and lifetime allowance remain frozen.
• Making Tax Digital: No further announcements were made. It is still expected to come into force from 6 April 2024 for most taxpayers with trading or property turnover over £10,000 per year.
• Personal savings allowance: No changes were announced.

Context and Significance

• The Autumn Statement follows the "mini budget" of September 2022, which included controversial tax cuts that were later reversed.
• The Chancellor emphasized the need to increase taxes to address the public finances and the cost-of-living crisis.
• Despite speculation about changes to the taxation of non-domiciled individuals, no such changes were introduced. This is seen as a relief for employers, as it maintains the current remittance basis for non-U.K. domiciled assignees, allowing them to exclude non-U.K. income and gains from U.K. taxation.
• Employers may be disappointed by the freeze on personal allowances and thresholds, as this could lead to higher effective tax rates when adjusted for inflation.

Scotland and Wales

• Scotland: The Scottish Parliament will set income tax rates in December 2022.
• Wales: The Welsh Senedd will publish its draft budget in December 2022, setting income tax rates for Welsh taxpayers.

Conclusion

The Autumn Statement 2022 focuses on maintaining the current tax and NIC regime while introducing gradual reductions in tax-free allowances and thresholds. These changes are expected to increase the tax burden on high earners, particularly those with income over £125,140. Employers of globally-mobile employees may welcome the absence of radical changes to the treatment of non-domiciled individuals and the continuation of the remittance basis. However, the freeze on personal allowances and thresholds may lead to increased real tax liability for some individuals. KPMG LLP (U.K.) continues to monitor developments and provide updates to affected stakeholders.

Key Points

• Reduced additional rate tax threshold from £150,000 to £125,140 (April 2023).
• Capital gains tax allowance reduced to £6,000 (April 2023) and £3,000 (April 2024).
• Dividend allowance cut to £1,000 (April 2023) and £500 (April 2024).
• NIC rates for directors and employers revert to 13.8% for 2023/24.
• No changes to pension allowances, Making Tax Digital, or personal savings allowance.
• Continued remittance basis for non-domiciled individuals, providing tax certainty for globally-mobile employees.