The new Chancellor of the Exchequer (the 4th of 2022) Jeremy Hunt made his first fiscal statement to the House of Commons in today’s Autumn Statement. It was effectively a Budget announcement and included several significant changes to the tax system.

Most notably the threshold for starting to pay income tax at the 45% highest rate will be reduced from £150,000 to £125,140 from April 2023. This is expected to bring an additional 250,000 taxpayers into the 45% band. It also effectively means that almost everyone with income over £100,000 will be paying income tax at 45% or at the higher effective rate of 60% as their personal allowance abates between £100,000 and £125,140.

There was also a significant reduction in amount of capital gains that an individual can realise without paying Capital Gains Tax. The Annual Exempt Amount, currently £12,300, will be reduced to £6,000 from April 2023 and then again to £3,000 from April 2024. Investors will also see an increase in the tax that they will pay on dividends, the tax-free Dividend Allowance halving from its’ current level of £2,000 to £1,000 from April 2023 and halving again to £500 from April 2024.

Key allowances and exemptions, many of which were already frozen until April 2026, will remain at current levels until April 2028 - this includes the personal allowance, the basic rate and higher rate tax thresholds and the Inheritance Tax Nil Rate Band.

Despite rumours before the Chancellor’s speech there were no changes to the tax regime for non-domiciles, something that the Shadow Chancellor Rachel Reeves pointed out in her response. It would seem likely, especially if there is a change in Government at the next General Election, that the benefits of non-domiciled status will be reduced, if not removed entirely. So it would be wise for those who hold that status to consider their planning sooner rather than later.

Philip Crowther-Green