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25 November 2022

The 2022 Autumn Statement – Boiling the frog

As part of our fortnightly Private Wealth Planning series Private Client partner Frederick Bjorn and consultant Michael Parkinson reflect on and summarise the 2022 Autumn statement, delivered on 17 November.


Jeremy Hunt, the UK Chancellor of the Exchequer, had made no secret of the fact that his 2022 Autumn Statement (delivered on 17 November) would include tax rises; in the days leading up to the statement, he went on record to say that everyone would be paying “a bit more tax” and that “people with the broadest shoulders will bear the heaviest burden”.

That second quote in particular helped to fuel speculation of a hike in Capital Gains Tax rates, such as bringing them into line with income tax rates (CGT was conspicuously excluded from the Conservatives’ 2019 manifesto pledge not to increase certain tax rates), of further changes to the tax regime for UK resident non-domiciled individuals (such as shortening the period of UK residence during which the remittance basis can be claimed) and of changes to tax relief on pension contributions (such as restricting the relief to basic rate tax only).

It was therefore something of a surprise, and for many clients and their professional advisers a relief, that the Autumn Statement included none of those measures and instead relied on “fiscal drag” as the main lever for increasing the tax take by freezing or in some cases reducing current allowances and thresholds; the fiscal equivalent of boiling the proverbial frog.

We summarise the main points from the Autumn Statement below.

Income Tax

Although there are no changes to actual rates of income tax, the threshold for the top 45% rate will be reduced from £150,000 to £125,140 from 6 April 2023. Why £125,140 and not a round £125,000, you might reasonably ask? The answer lies in the effective 60% income tax rate that applies on income between £100,000 and £125,140, as a result of £12,570 tax free personal allowance being withdrawn by £1 for every £2 of income above £100,000; an easily overlooked stealth tax legacy from the 2008 financial crisis, which came into effect from 6 April 2010.

The freeze on the personal allowance and the basic rate and higher rate income tax thresholds will be extended from April 2026 to April 2028; at current rates of inflation, this will result in a significant income tax hike in real terms.

The tax free dividend allowance will be reduced from £2,000 to £1,000 from 6 April 2023 and again to just £500 from 6 April 2024.

Capital Gains Tax

Despite all of the speculation to the contrary, CGT rates have been left unchanged – so a maximum rate of 20% (or 28% for residential property gains).

However, the CGT annual exempt amount will be reduced from £12,300 to £6,000 from 6 April 2023 and again to just £3,000 from 6 April 2024.

Inheritance Tax

IHT rates are unchanged but the freeze on the £325,000 nil rate band (and £175,000 residential nil rate band) will be extended from April 2026 to April 2028, at which point the nil rate band will not have been increased for 19 years (although that is perhaps generous compared to the IHT annual exemption, which has been stuck at £3,000 since 1981…).

Stamp Duty Land Tax

One of the few surviving tax reductions implemented by the ill-fated September 2022 mini-Budget was the increase in the 0% SDLT band for residential property from £125,000 to £250,000; this will be reversed but not until 1 April 2025.

Corporation Tax

Finally, after a dizzying series of U-turns, a reminder that the rate of corporation tax will after all be rising from 19% to 25% from 1 April 2023.


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Michael Parkinson
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Frederick Bjørn
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