Income tax – 20% & 40% rates remain unchanged. 45p tax rate to start from £125,140 instead of £150,000. This means people will pay an effective tax rate of 60% on income between £100,000 and £125,140, and 45% on income above this. Personal allowances, and thresholds remain unchanged for 2 years until April 2028.
Benefits & State pension to increase with inflation by 10.1% as triple lock guaranteed from April 2023.
Investors - Dividend allowance currently at £2k will reduce to £1k next year and £500 the year after.
Employment – National minimum wage for over 23 year olds from £9.50 to £10.42 p/hr. The rates cut on NIC and NIC thresholds to remain until April 2028. Employer allowance of £5k to remain until March 2026.
IHT – no changes until April 2018
Capital gains – Our current tax free allowance of £12,300 is to reduce to £6,000 from next year and £3,000 the year after.
SDLT – cuts in last mini-budget to remain until March 2025.
Business taxes – no changes to the planned increase in corporation tax to 25% from April 2023.
R&D tax relief - SMEs deduction rate cut to 86% and the credit rate to 10% but an increase in the headline R&D credit rate from 13% to 20%. Therefore making SME scheme less generous and large business scheme more generous. This rebalancing of the rates between the two schemes will result in more than £1bn of extra funds for the exchequer.
Electric cars – from 2025 will no longer be exempt from VED. Company car rates will continue to be favourable for electric cars.
VAT – no changes
Windfall tax – Temporary increase in levy on oil and gas businesses from 25% to 35% until March 2028. For Electricity businesses a new temporary 45% tax from Jan 2023.
Household energy price cap extended for 1 year with the cap to increase to £3k from £2.5k.
Spending – increase in budgets for NHS, Social Care and Education.
N. Ireland Executive - Devolved Governments increase including £650m for the N. Ireland Executive.
The Chancellor says his plans include helping make Britain the 'new Silicon valley' …
There is a hidden cost to today’s announcements which is the additional tax compliance burden - as the capital gains tax and dividend tax free allowances reduce, more income and gains are brought into the tax net which will need to be reported on tax returns for the first time.
Our more detailed summary of today’s announcements to follow.