The Autumn Budget 2022 has finally been announced by Jeremy Hunt on 17th November 2022 following a two-week delay and weeks of chaos following his predecessors’ announcements.
It has been anticipated that the Autumn budget 2022 would feature a number of tax increases and budget cuts. From council tax bills and energy bills, to income tax rates and dividend tax rates. Jeremy Hunt has defended his Autumn Statement by claiming £25 billion in tax rises shows he is facing up to difficult decisions.
It is estimated the average family will be more than £800 worse off a year following the changes announced. Around 55% of households will be less well off as a result of the combination of tax rises and spending cuts. Most of this is due to the less generous energy support announced in the Autumn Budget.
An extra 92,000 people will be paying tax above the personal allowance and 130,000 will be paying the higher rate of income tax in 2027/28.
The Autumn Budget 2022 Statement in Summary:
Council Tax up by 5%
Tax Thresholds Freeze
45p Tax
Windfall Taxes
Car Tax – Electric Vehicles 2025
Fuel Costs increase by 12p
Capital Gains Tax
Energy Bills – from £2500 to £3000
Social Care
Stamp Duty
Pensions & benefits
Cost of Living
Foreign Aid
NHS – 6.6 billion
Spending
Defence Budget
Schools
Government Debt
Council Tax
Council Tax is expected to rise by 5 per cent a year for the next 5 years with annual bill for average Band D home increasing by £250 over the next 5 years.
Up to now councils were required to put any plans to bump up tax by more than 2 per cent to the public in a vote, alongside a 1 per cent to fund social care.
Treasury sources admitted that 95 per cent will take advantage of the new maximum.
The Autumn Budget 2022 tweak contributes to an eye-watering squeeze for Britons over the next two years, which will wipe out eight years of progress in living standards.
It means Band D households in some of England’s most expensive boroughs could face a council tax hike of more than £114 in the coming year.
The average amount of council tax paid on a Band D home could jump by £98.30 to pushing the mean from £1,966 to £2,064.30 nationwide. For those living in Band H homes, which is the highest tax rate, could see rises of more than £200 if councils take up the option of increasing it by 5 per cent.
In Westminster, which has the lowest rate in the country, a Band D home could see £43.21 added to their tax bill, bringing it £907.34.
If every local authority increased tax by 5 per cent, Westminster and Wandsworth (£926.23) would be the only councils in England where tax bills would remain below £1,000.
TAX
In an extraordinary Autumn Budget 2022, the Chancellor warned Britons the country must make ‘sacrifices’ to weather turmoil at home and abroad while insisting the emergency response would be ‘compassionate’.
Tax receipts are set to top £1trillion for the first time this year, rather than next year, as had been anticipated, largely due to the windfall tax.
A Treasury distributional analysis indicated that by next year all single-adult households earning more than £25,000 will be worse off from the measures announced, while for families of four the figure was £59,000.
Tax Thresholds Freeze
A four-year freeze has been announced in the Autumn Budget on income tax and national insurance allowances. The basic rate threshold will stay at £12,571 until 2028, while the starting point for 40p tax will be held at £50,271.
45p Tax
The threshold for the top rate of tax is being lowered from £150,000 to £125,000, which could drag around 250,000 high earners into the top rate for the first time.
Windfall Taxes
Wind and solar farms across the UK will have to hand over close to half of their excess profits, the Government has announced, in a plan that the industry said could deter much-needed investment.
The windfall tax on renewables, biomass and nuclear power generators will be set at 45 per cent, Chancellor Jeremy Hunt announced today. But gas and coal generators will be exempt.
Meanwhile the Government also upped the windfall tax on oil giants such as Shell and BP who drill in the North Sea from 25 per cent to 35 per cent.
The two taxes are significantly different. The oil and gas companies will be allowed to claim back most of their extra tax if they invest in the UK, but there is no way for the wind farms to claw back any of their windfall tax.
However, the 35 per cent will be levied on all of the oil and gas companies’ North Sea profits, while wind farms and other renewables will only be charged 45 per cent on anything above £75 per megawatt hour (MWh) of electricity they use.
The goal is the taxes can raise approximately £14 billion for the Treasury between them next year.
Car Tax
Electric cars will be charged road tax for the first time, starting in 2025. The Chancellor said electric vehicles will no longer be exempt from Vehicle Excise Duty (VED) from April 2025 to make the motoring tax system ‘fairer’.
Addressing MPs, he said:
‘Because the OBR (Office for Budget Responsibility) forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then, electric vehicles will no longer be exempt from vehicle excise duty.’
Fuel Rises
The Autumn Statement warned motorists of a 12p a litre increase on the price of petrol and diesel by next year.
Capital Gains Tax
The Autumn Statement announced that the annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year, and then halved again to just £3,000 from April 2024.
Landlords making more profit than that when selling properties will be taxed at a rate of 18 per cent, or 28 per cent for higher-rate taxpayers.
CGT is charged on any profit someone makes on an asset that has increased in value, when they come to sell it. This could be when selling a buy-to-let investment or company shares for example.
There are around 2.65million landlords in the UK, according to the latest HMRC figures, and many hold properties which have significantly risen in value during their ownership.
Energy bills
Subsidies on energy bills are being downgraded to save money. The Chancellor said the energy price guarantee scheme will increase from £2,500 for the average household to £3,000 for 12 months from April.
A universal one-off payment of £400 this winter will not be repeated, meaning millions will be an average of £900 worse off.
Cornwall Insights estimates that without government help the level would rise to £4,245.
Social care
The Chancellor delayed the cap on social care costs by two years, with officials predicting it will save £1billion next year.
It means the £86,000 limit people in England would have to spend for their care will no longer come into effect next October – a pledge made by the Government last year.
Stamp Duty
The stamp duty cuts announced in the recent mini-budget will be scrapped in 2025.
The cuts, announced by ex-chancellor Kwasi Kwarteng at the end of September, mean that no stamp duty is be paid on the first £250,000 of any property purchase – doubling the threshold for the tax – which was previously at £125,000.
For first-time buyers the duty threshold was increased from £300,000 to £425,000.
Pensions and benefits
The Autumn Budget 2022 stated from April, pensions and benefits will rise in line with the September inflation figure of 10.1 per cent, which will see the new state pension rise by £18.70 to £203.85 a week.
Cost of living payments for vulnerable
The Government will introduce additional cost-of-living payments for the ‘most vulnerable’, with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.
Foreign aid
Mr Hunt said the reduction in the UK’s international development spending from 0.7 per cent to 0.5 per cent of national income will stay in place for longer, potentially another five years.
NHS
The Chancellor announced that the NHS will receive an extra £3.3billion in each of the next two years as the health service grapples with inflationary pressures. Totalling 6.6 Billion over the next two years.
Spending
It was announced at the Autumn budget 2022 that public spending cuts totalling £30billion. Some capital projects face curbs, such as prison building.
Schools
Billions of pounds will be ploughed into schools and hospitals despite wider cuts to public spending, Jeremy Hunt revealed. An extra £2.3 billion per year will be invested in schools over the next two years.
But as the cost of living crunch continues to deepen for the nation, heating bills have quadrupled, potentially sending the trust’s schools into deficits.
Defence Budget
Jeremy Hunt has said he would continue to maintain the defence budget at ‘at least 2% of GDP’.
The Chancellor told the Commons he and the Prime Minister ‘both recognise the need to increase defence spending’, adding: ‘But before we make that commitment it is necessary to revise and update the Integrated Review, written as it was before the Ukraine invasion.
Government Debt
Government debt is predicted to balloon £400 billion higher than previously expected, the fiscal watchdog has warned, as it unveiled a bleak outlook for the UK economy after Jeremy Hunt laid out his Autumn Budget 2022 statement.
The Office for Budget Responsibility (OBR) said the economy is already in recession and will shrink further next year due to sky-high inflation.
It forecast the UK economy will be shrink by 2 per cent in total over a lengthy recession which started earlier this year.
It has, however, slightly upgraded the total economic growth expected this year to 4.2 per cent from 3.8 per cent in the March statement.
The OBR has also predicted that inflation will hit an average rate of 9.1 per cent this year and 7.4 per cent in 2023.
Autumn Budget 2022
Autumn Budget 2022
The Autumn Budget 2022 has finally been announced by Jeremy Hunt on 17th November 2022 following a two-week delay and weeks of chaos following his predecessors’ announcements.
It has been anticipated that the Autumn budget 2022 would feature a number of tax increases and budget cuts. From council tax bills and energy bills, to income tax rates and dividend tax rates. Jeremy Hunt has defended his Autumn Statement by claiming £25 billion in tax rises shows he is facing up to difficult decisions.
It is estimated the average family will be more than £800 worse off a year following the changes announced. Around 55% of households will be less well off as a result of the combination of tax rises and spending cuts. Most of this is due to the less generous energy support announced in the Autumn Budget.
An extra 92,000 people will be paying tax above the personal allowance and 130,000 will be paying the higher rate of income tax in 2027/28.
The Autumn Budget 2022 Statement in Summary:
Council Tax
Council Tax is expected to rise by 5 per cent a year for the next 5 years with annual bill for average Band D home increasing by £250 over the next 5 years.
Up to now councils were required to put any plans to bump up tax by more than 2 per cent to the public in a vote, alongside a 1 per cent to fund social care.
Treasury sources admitted that 95 per cent will take advantage of the new maximum.
The Autumn Budget 2022 tweak contributes to an eye-watering squeeze for Britons over the next two years, which will wipe out eight years of progress in living standards.
It means Band D households in some of England’s most expensive boroughs could face a council tax hike of more than £114 in the coming year.
The average amount of council tax paid on a Band D home could jump by £98.30 to pushing the mean from £1,966 to £2,064.30 nationwide. For those living in Band H homes, which is the highest tax rate, could see rises of more than £200 if councils take up the option of increasing it by 5 per cent.
In Westminster, which has the lowest rate in the country, a Band D home could see £43.21 added to their tax bill, bringing it £907.34.
If every local authority increased tax by 5 per cent, Westminster and Wandsworth (£926.23) would be the only councils in England where tax bills would remain below £1,000.
TAX
In an extraordinary Autumn Budget 2022, the Chancellor warned Britons the country must make ‘sacrifices’ to weather turmoil at home and abroad while insisting the emergency response would be ‘compassionate’.
Tax receipts are set to top £1trillion for the first time this year, rather than next year, as had been anticipated, largely due to the windfall tax.
A Treasury distributional analysis indicated that by next year all single-adult households earning more than £25,000 will be worse off from the measures announced, while for families of four the figure was £59,000.
Tax Thresholds Freeze
A four-year freeze has been announced in the Autumn Budget on income tax and national insurance allowances. The basic rate threshold will stay at £12,571 until 2028, while the starting point for 40p tax will be held at £50,271.
45p Tax
The threshold for the top rate of tax is being lowered from £150,000 to £125,000, which could drag around 250,000 high earners into the top rate for the first time.
Windfall Taxes
Wind and solar farms across the UK will have to hand over close to half of their excess profits, the Government has announced, in a plan that the industry said could deter much-needed investment.
The windfall tax on renewables, biomass and nuclear power generators will be set at 45 per cent, Chancellor Jeremy Hunt announced today. But gas and coal generators will be exempt.
Meanwhile the Government also upped the windfall tax on oil giants such as Shell and BP who drill in the North Sea from 25 per cent to 35 per cent.
The two taxes are significantly different. The oil and gas companies will be allowed to claim back most of their extra tax if they invest in the UK, but there is no way for the wind farms to claw back any of their windfall tax.
However, the 35 per cent will be levied on all of the oil and gas companies’ North Sea profits, while wind farms and other renewables will only be charged 45 per cent on anything above £75 per megawatt hour (MWh) of electricity they use.
The goal is the taxes can raise approximately £14 billion for the Treasury between them next year.
Car Tax
Electric cars will be charged road tax for the first time, starting in 2025. The Chancellor said electric vehicles will no longer be exempt from Vehicle Excise Duty (VED) from April 2025 to make the motoring tax system ‘fairer’.
Addressing MPs, he said:
‘Because the OBR (Office for Budget Responsibility) forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then, electric vehicles will no longer be exempt from vehicle excise duty.’
Fuel Rises
The Autumn Statement warned motorists of a 12p a litre increase on the price of petrol and diesel by next year.
Capital Gains Tax
The Autumn Statement announced that the annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year, and then halved again to just £3,000 from April 2024.
Landlords making more profit than that when selling properties will be taxed at a rate of 18 per cent, or 28 per cent for higher-rate taxpayers.
CGT is charged on any profit someone makes on an asset that has increased in value, when they come to sell it. This could be when selling a buy-to-let investment or company shares for example.
There are around 2.65million landlords in the UK, according to the latest HMRC figures, and many hold properties which have significantly risen in value during their ownership.
Energy bills
Subsidies on energy bills are being downgraded to save money. The Chancellor said the energy price guarantee scheme will increase from £2,500 for the average household to £3,000 for 12 months from April.
A universal one-off payment of £400 this winter will not be repeated, meaning millions will be an average of £900 worse off.
Cornwall Insights estimates that without government help the level would rise to £4,245.
Social care
The Chancellor delayed the cap on social care costs by two years, with officials predicting it will save £1billion next year.
It means the £86,000 limit people in England would have to spend for their care will no longer come into effect next October – a pledge made by the Government last year.
Stamp Duty
The stamp duty cuts announced in the recent mini-budget will be scrapped in 2025.
The cuts, announced by ex-chancellor Kwasi Kwarteng at the end of September, mean that no stamp duty is be paid on the first £250,000 of any property purchase – doubling the threshold for the tax – which was previously at £125,000.
For first-time buyers the duty threshold was increased from £300,000 to £425,000.
Pensions and benefits
The Autumn Budget 2022 stated from April, pensions and benefits will rise in line with the September inflation figure of 10.1 per cent, which will see the new state pension rise by £18.70 to £203.85 a week.
Cost of living payments for vulnerable
The Government will introduce additional cost-of-living payments for the ‘most vulnerable’, with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.
Foreign aid
Mr Hunt said the reduction in the UK’s international development spending from 0.7 per cent to 0.5 per cent of national income will stay in place for longer, potentially another five years.
NHS
The Chancellor announced that the NHS will receive an extra £3.3billion in each of the next two years as the health service grapples with inflationary pressures. Totalling 6.6 Billion over the next two years.
Spending
It was announced at the Autumn budget 2022 that public spending cuts totalling £30billion. Some capital projects face curbs, such as prison building.
Schools
Billions of pounds will be ploughed into schools and hospitals despite wider cuts to public spending, Jeremy Hunt revealed. An extra £2.3 billion per year will be invested in schools over the next two years.
But as the cost of living crunch continues to deepen for the nation, heating bills have quadrupled, potentially sending the trust’s schools into deficits.
Defence Budget
Jeremy Hunt has said he would continue to maintain the defence budget at ‘at least 2% of GDP’.
The Chancellor told the Commons he and the Prime Minister ‘both recognise the need to increase defence spending’, adding: ‘But before we make that commitment it is necessary to revise and update the Integrated Review, written as it was before the Ukraine invasion.
Government Debt
Government debt is predicted to balloon £400 billion higher than previously expected, the fiscal watchdog has warned, as it unveiled a bleak outlook for the UK economy after Jeremy Hunt laid out his Autumn Budget 2022 statement.
The Office for Budget Responsibility (OBR) said the economy is already in recession and will shrink further next year due to sky-high inflation.
It forecast the UK economy will be shrink by 2 per cent in total over a lengthy recession which started earlier this year.
It has, however, slightly upgraded the total economic growth expected this year to 4.2 per cent from 3.8 per cent in the March statement.
The OBR has also predicted that inflation will hit an average rate of 9.1 per cent this year and 7.4 per cent in 2023.
If you have questions or concerns, reach out to the Robinsons Team
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