Following the release of the latest forecast for the UK economy by the Office for Budget Responsibility (OBR), chancellor Jeremy Hunt announced in the Autumn budget today that the UK was officially in a recession. A recession is defined as negative economic growth for two consecutive quarters. Whilst growth for this year is predicted as 4.2% the size of the economy is predicated to shrink by 1.4% in 2023
Mr Hunt said public spending would grow more slowly than the economy. He said there were a host of “difficult decisions” - including tax increases and rises to energy bills to help weather the economic “storm”. This week the Office for National Statistics revealed inflation had now reached 11.1 per cent.
The key announcements of the budget, and how they affect you, are summarised below.
How will the budget affect you?
Income tax, personal allowance and higher rate thresholds will be frozen for a further two years, on top of an existing four-year freeze, to April 2028.
National Insurance and inheritance tax thresholds will be frozen for a further two years, until April 2028.
The National Living Wage will be increased from £9.50 an hour for over-23s to £10.42 from April next year.
Benefits and state pensions will rise with inflation.
Reduce the dividend allowance from £2,000 to £1,000 from April 2023 and then £500 from April 2024.
Capital Gains Tax: reduce the annual exempt amount from £12,300 to £6,000 from April 2023 then £3,000 from April 2024.
The threshold for the 45p additional rate of tax will be cut from £150,000 to £125,140.
From 2025 electric vehicles will no longer be exempt from vehicle excise duty.
£900 Cost of Living Payment for households on means-tested benefits in 2023-24
£300 Pensioner Cost of Living Payment in 2023-24.
Windfall taxes will raise £14bn, including a new temporary 45% levy on electricity producers.
Business Rates: 75% relief for Retail, Hospitality and Leisure sectors in 2023-24, up to £110,000 cash cap.
Increase the van benefit charge and car fuel benefit charge in 2023-24 in line with growth in CPI.
Employment allowance will be retained at a higher level of £5,000.
Company Car Tax increase: set rates from 6 April 2025 to 5 April 2028.
National Insurance: maintain the secondary threshold for employer contributions at current level from April 2023 until April 2028.
VAT: maintain registration threshold at current level to 31 March 2026.
Business Rates: freezing the multiplier in 2023-24.
First Year Allowance for electric vehicle charge points: extend for a further two years until April 2025.
Help for energy bills will be extended from April 2023.
Targeted support with the cost of living for those on low incomes, disability and pensioners
A windfall tax on the profits of oil and gas firms will increase from 25% to 35% and be extended until March 2028.
New “temporary” 45% tax on companies that generate electricity will be applied from January.
Energy Price Guarantee - cap on the unit rate of electricity and gas. From 1 April 2023 until 31 March 2024 the typical household will pay the equivalent of £3,000 per year.
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