During his first Autumn Statement to Parliament, Jeremy Hunt announced measures to put the country on a “path to stability.”
Grunberg & Co says the decision to freeze and reduce personal tax reliefs, thresholds and allowances will come at a cost for many taxpayers.
The Chancellor had a tough challenge ahead of him as he tried to balance the books and deal with rising inflation, interest rates and a cost-of-living crisis.
The reality of the changes means that business owners and workers will see the amount of tax they pay rise in years to come.
“Jeremy Hunt seems to have taken a very measured approach in putting together his Autumn Statement,” said Nimesh Patel, Tax Partner at Grunberg & Co. “His policies aren’t an obvious attempt to push up taxes, but people will pay more as their income rises due to inflation and they find themselves exceeding their current allowances and move into new tax bands following the extension of the personal tax freeze until 2028.”
During his speech, the Chancellor also announced a reduction to the Additional Rate Income Tax threshold from £150,000 to £125,140 in April 2023, while the annual Dividend Tax Allowance and Capital Gains Tax exemption will also fall twice in the next two tax years.
“These changes on their own might not seem that significant but combined as a whole they will mean that many individuals will pay more tax on income or when they make a gain from the assets they sell,” added Nimesh.
Grunberg & Co said that when it came to the finances of businesses, the £13.6 billion of support to help with the transition to a new business rates system was helpful, especially for the hard-hit businesses such as bars, restaurants and retailers.
Various changes to the R&D tax system were announced, the highlight being the reduction to the SME scheme additional tax deduction, which will fall from 130% to 86% for expenditure on or after 1 April 2023.
Nimesh said: “The real impact of this change may not be as great as feared due to the rise in Corporation Tax from April 2023, which may mean that the amount of relief businesses receive won’t change significantly – especially for those paying the top 25 per cent rate of tax.”
With many small changes to existing tax legislation coming up, Grunberg & Co said it was important for businesses and individuals to seek advice.