Autumn Statement 2022
The Chancellor kept the Conservative Party Manifesto commitment not to increase rates of Income Tax, National Insurance Contributions or VAT but the following changes were announced
Headline changes
- Reduction in the threshold at which 45% tax is charged from £150,000 to £125,140 from 6 April 2023.
- Reduction in the tax free dividend amount from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
- Reduction in the Capital Gains Tax annual exempt amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
- Increase in taxable benefits on company cars and introduction of car tax for energy efficient cars from April 2022
Jane Mackay National Head of Tax said "The Chancellor delivered the tax changes that we expected. Politically and economically, this may have been exactly what was needed right now. By freezing or reducing tax-free allowances and bands, the Autumn Statement will significantly increase the tax burden now for the working population and impact wage demands. Let’s hope the plan calms inflation soon and sets the scene for economic growth."
What's the impact on social purpose and non profit organisations?
Today the Chancellor announced his Autumn Statement against the backdrop of a pending recession, cost of living crisis and decreasing living standards for many. This Statement has offered minimal relief to the social purpose and non profit sector, despite its critical role in helping those most in need. Below are the key points of interest from his announcement.
- The overseas aid spending cap will be kept at 0.5% of Gross National Income for the next five years, instead of returning to the 0.7% official target. This has already had a significant effect on overseas aid charities.
- No change to the VAT status on independent school fees despite speculation.
- Two-year delay to the Dilnot reforms and additional increase in funding of the social care sector. Local authorities with social care responsibilities will be able to increase the adult social care precept by up to 2% per year.
- Capping increase in social rents to 7% for the next financial year (four million families helped with a £200 per person saving next year).
- The 9.7% increase to the National Living Wage will impact on employers not just directly but also indirectly if they look to maintain differentials between their salary bands.
- There is a significant package of help for rate-paying businesses, which will help charities that can only claim the 80% mandatory business rates relief for themselves, and any trading subsidiaries that pay business rates. The reliefs include:
- a freeze on the multiplier for 2023/24, which will have knock-on benefits for the subsequent four years
- caps on any increases due to upwards revaluation of business properties over the three years from 1 April 2023, whereas any downwards-valued properties will benefit immediately from the reductions
- an increase in the relief for retail, hospitality and leisure properties from 50% to 75% up to £110,000 per business in 2023/24.
While some of the announcements above are welcome, they do little to relieve the wider challenges currently faced by social purpose and non profit organisations in meeting increased demand for services as the cost of living crisis takes hold.
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