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What to expect on Thursday....

Jayne Hutchings Last updated: November 14, 2022

Jeremy Hunt is scheduled to deliver his first Autumn Statement on Thursday (17 November).

Reports over the weekend have, as expected, suggested tax rises by stealth and spending cuts. With a budget deficit reported of up to £50 billion and "no rabbit being pulled out of the hat" according to the Chancellor, it is unlikely to be good news and is likely to add to the burden for individual taxpayers on top of the current cost of living crisis and uncertainty surrounding energy prices.

We have put together below a quick summary of what could be announced on Thursday:

The freezing of all personal allowances and income tax thresholds, potentially until 2028. This will mean more people paying tax at 40%. This freezing of bands and allowances is expected to net the Treasury in excess of £30bn over the period.
A reduction in the threshold as to when the additional rate of tax (of 45%) is payable from £150,000 to £125,000. This will cost a taxpayer in this bracket a further £1,250 a year.
A halving of the dividend allowance to £1,000 and potentially a further increase in tax on dividends. These measures could raise a further £2bn. Whilst the £2bn saving could sound attractive, it does take away the UK tax system's long standing appreciation and acknowledgement of entrepreneurial risk.
Capital gains tax (CGT) - a reduction is the annual exempt amount - probably by as much as half to £6,150 (for individuals) and an increase in the rate at which CGT is payable, maybe for larger transactions.
Pensions could also be hit with a reduction in tax relief on contributions and the freezing of the lifetime allowance until 2028. It is believed that the removal of higher rate tax relief could net the Treasury up to £10 bn. On the downside though, it could mean that people are discouraged from making their own financial retirement plan, increasing the burden on the state in years to come.
VAT - as with other thresholds, the current limit at which VAT is payable - £85,000, is expected to be frozen until at least 2026.
R&D Funding - In a further blow to entrepreneurship, this funding could be cut. Once again, this could see the UK lose out to overseas competitors and see a "brain drain" from the UK.
IR35 - The confusion around how the system works and whether rules are being abolished or not, need to be addressed and a review of the system is needed. It could lead to statutory legislation being introduced to define an employee and a self employed worker.