The Autumn Statement went as expected with the main changes being the tax-free allowances, exemptions and tax thresholds reduced or frozen. Many allowances and thresholds would normally increase with inflation.
It was pleasing to see that it included relief for business rates, they were set to increase significantly for many businesses from April. We await further details on transitional relief but Jeremy Hunt claimed that two-thirds of properties would pay no more next year. Some businesses may still be in for a shock when the next rates bill drops in February or March.
This is a brief summary of the main changes that will impact agency owners and their shareholders.
A relief package was announced which includes three years of transitional relief. Business rates were set to increase by annual inflation and the change in local market value rents from April 2015 to 2021.
Employer’s National Insurance
The threshold at which employer NI becomes payable for each employee is frozen at £758 a month until 2028. Smaller businesses will continue to benefit from the annual £5,000 Employer’s Allowance.
The dividend allowance reduces from £2,000 to £1,000 from April 2023. The allowance further reduces to £500 from April 2024.
Income tax thresholds
The tax-free personal allowance and 40% tax rate thresholds are held until 2027/28. The 45% additional rate threshold reduces from £150,000 to just over £125,000 from April 2023.
Employee National Insurance thresholds
The employee National Insurance thresholds are held until 2027/28.
R&D tax reliefs
The additional deduction available to SMEs on qualifying expenditure reduces from 130% to 86% from April 2023. The SME credit rate (for loss-making companies) will decrease from 14.5% to 10%.
Road tax is payable from April 2025. An annual expensive car supplement of £355 is
payable for 5 years on EVs purchased from April 2025 and priced at £40,000 or more. From 2025/26, benefit in kind appropriate percentages will increase by 1 percentage point each year until the rate reaches 5%.
Capital Gains Tax Annual Exemption
The Capital Gains Tax Annual Exemption is reduced from £12,300 to £6,000 from April 2023. There is a further reduction to £3,000 from April 2024.
Please get in touch if you would like to discuss how we can assist with tax planning for your agency and yourself.