A review of the Autumn Statement
Chancellor of the Exchequer, Jeremy Hunt, gave his Autumn Statement on 17 November 2022. This was awaited with both anticipation and trepidation after the political events of recent months and the disruption generated by Chancellor Kwasi Karteng’s mini-Budget in September, although it was noticeable that there was a carefully orchestrated set of pointers in advance and much emphasis on the seriousness of the situation.
Looking at the announcements which will be of most interest for an international readership:
- the increase in the rate of corporation tax to 25% for companies with profits over £250,000 will go ahead from April 2023;
- following consultation, the government will legislate to implement the globally agreed G20-OECD Inclusive Framework Pillar 2 in the UK;
- various tax allowances will continue to be frozen – the inheritance tax nil-rate band at £325,000, the residence nil-rate band at £175,000 and the residence nil-rate band taper starting at £2 million were already frozen to April 2025 and will stay at these levels until April 2028;
- for those with UK residential property still in a corporate wrapper and paying the Annual Tax on Enveloped Dwellings, the annual chargeable amounts will be increased by the September Consumer Price Index of 10.1% for the 2023-2024 charging period;
- cuts were proposed to the dividend allowance and the capital gains tax annual exempt amount – the former from £2,000 to £1,000 from April 2023 and to £500 from April 2024, the latter from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. This will affect the UK resident non-dom individual;
- a policy paper was issued on the 17 November 2022 proposing some revisions to the situation where a UK resident non-dom individual holds more than 5% of the shares in a closely held UK company and exchanges them for an equivalent holding in a non-UK company. This currently operates on the basis of a share for share exchange so no gain arises and thereafter the individual may be able to access the remittance on gains realised on a subsequent disposal or income receipts. The proposals propose that either the new share holding is deemed to have UK situs so that the remittance basis does not apply to subsequent income or gains, or the individual can elect to pay a capital gains tax charge by making an election at the point of reorganisation; and
- interestingly and despite the rumours to the contrary, no other changes were proposed to the non-dom system of taxation. The Chancellor preferred to keep the UK as an attractive destination for these individuals, acknowledging that they have a variety of other countries to chose from where they have a different tax regime and that they add much to the economy in other ways.
Both the Autumn Statement and the September mini-Budget have at their core the question how to generate economic growth in a time of inflation and how to protect public services. They reflect different approaches through the use of taxation to this question.
Please contact our private wealth team to learn more.