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Autumn Statement: All you need to know

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  • 18/11/2022
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Autumn Statement: All you need to know
Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measures and spending cuts to meet the three priorities of “stability, growth and public services”.

An end date for stamp duty reforms confirmed in the mini Budget, frozen thresholds for inheritance tax (IHT), changes to capital gains tax and dividend tax, rises in energy price guarantee, Support for Mortgage Interest (SMI) reform and investment in energy efficiency were among some of the announcements.

Along with the announcements from Hunt there was also the commensurate report from the Office of Budget Responsibility, which warned of house price falls and outlined predictions for interest rates and inflation.

The report also cautioned of the worst fall in UK living standard since records began in 1956, with a 7.1 per cent drop in real disposable income in the next two years.

 

Mini budget stamp cut to end in 2025

Hunt said that the increase to the stamp duty threshold to £250,000 introduced in the mini Budget by his predecessor would be scrapped in 2025.

Former Chancellor Kwasi Kwarteng said that the measure would help first-time buyers get on the property ladder.

Hunt said that with the OBR predicting housing activity would fall in the next two years the stamp duty cuts would sustain activity during this period.

He added that after the measure came to an end, he would be “creating an incentive to support the housing market and the jobs associated with it by boosting transactions during the period the economy most needs it”.

Autumn Statement 2022: Mini budget stamp duty cut now set to end in 2025

 

House prices predicted to fall nine per cent

The OBR said house prices could fall by nine per cent between the end of this year and 2024 due to higher mortgage rates and the wider economic downturn.

It added that the average interest rates on stock of outstanding mortgages would hit a high of five per cent in the second half of 2024.

The OBR said the base rate would peak at five per cent in 2023 and inflation could hit a high of 11.1 per cent in Q4 this year.

House prices predicted to fall nine per cent – OBR

 

IHT threshold frozen for extra two years

Hunt also confirmed that the IHT threshold would be maintained until 2028, an additional two years on the previous deadline of 2026.

The current threshold is £325,000, the residence nil-rate band will stay at £175,000 and the resident nil-rate band tape will continue to start at £2m.

Some industry insiders said more people were finding themselves above this threshold, so many would still have to pay IHT and over-55s should look at their allowances.

Autumn Statement 2022: Inheritance tax threshold frozen for extra two years

 

CGT exemption more than halved to £6,000 from next year

The Chancellor said the annual exempt amount for CGT would be more than halved from £12,300 to £6,000 from April next year.

This will then fall to £3,000 from April 2024.

Industry figures warned this could hit the rental market and impact the attractiveness of property as an investment.

Autumn Statement 2022: Capital Gains Tax exemption cut to hit rental market

 

Dividend tax allowance reduced to £1,000

Hunt also made amendments to the amount you can earn before paying tax on dividends, falling from £2,000 to £1,000.

The change comes into force from April next year.

The move was widely predicted by industry commentators but it was said that the cut in allowance was likely to hurt the self-employed and those who hold assets outside of ISAs.

Autumn Statement 2022: Dividend tax allowance cut to £1,000

 

Energy Price Guarantee upped to £3,000

The Energy Price Guarantee will be extended for another year from April, with the average price of £,3000.

It was initially launched in September and capped average energy bills at £2,5000.

Hunt said the additional support would amount to around £500 per household and he also confirmed that the energy windfall tax on profits would rise from 25 per cent to 35 per cent.

Autumn Statement 2022: Energy Price Guarantee raised to £3,000

Millions to pay more in tax but minimum wage to rise

Hunt confirmed that the personal allowance, basic and higher rate thresholds for income tax will be frozen for another two years until 2028.

However, he added that there would be a cut to the threshold for additional rate of tax from £150,000 to £125,140.

Experts said that eight million people will pay a higher rate of tax at 40 per cent.

The government will also increase the National Living Wage to £10.42 an hour for workers aged 23 and over and National Minimum Wage rates would also rise.

Autumn Statement 2022: Millions to pay more in tax but minimum wage to rise

 

SMI wait period cut to three months

The wait period for SMI has been lowered from nine months to three months, in a move that Hunt said would help mortgage borrowers.

The zero earnings rules have also been abolished so claimants can continue to get support while in work and on Universal Credit.

The reforms come into force from next year.

Autumn Statement 2022: SMI wait period reduced to three months

 

Government to invest further £6bn in energy efficiency

The government will pump a further £6bn into energy efficiency, on top of £6.6bn that has already been provided.

A new energy efficiency taskforce has also been introduced to spearhead measures across the UK.

Hunt also said that he aims to cut UK’s energy consumption from buildings and industry by 15 per cent by 2023. This is a cut from 2021 levels.

Autumn Statement 2022: Government to invest further £6bn in energy efficiency

Social housing rent increase capped at seven per cent

The annual increase in social housing rent has been limited to a maximum of seven per cent to protect tenants from the cost-of-living crisis.

Hunt said rents are currently set at one per cent above September’s inflation rate meaning any increases would be in the realm of 11 per cent.

He continued that this would save the average tenant in the social rented sector £200 next year and the overall saving to the government would be around £630m in the next five years.

Autumn Statement 2022: Social housing rent increase capped at seven per cent

 

To read the Autumn Statement in full click here.

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