Our guide to the 2022 Autumn Statement provides a summary of Jeremy Hunt’s first announcements as Chancellor, focusing on the issues pertinent to our clients, their families and their businesses. Keen-eyed readers will notice that we have removed the Mini-Budget Insight that we published on 26th September, as the vast majority of announcements have since been cancelled or overwritten!
The new chancellor stated his priorities as stability, growth and public services, and claims to provide “fair solutions” despite taking “difficult decisions.” Hunt announced that economic stability relies on fiscal sustainability – and the Autumn Statement sets out the government’s plan to ensure that national debt falls as a proportion of the economy over the medium term. He claims to put forward a “very balanced package,” and insisted that decisions were made in a “fair way.” Broadly, his plan is to reduce debt servicing costs and leave more money to invest in public services, thus supporting the Bank of England’s action to control inflation – and giving businesses the stability and confidence they need to invest and grow in the UK.
A key ingredient of the chancellors’ claim of ‘fairness in delivering fiscal sustainability’ is expecting those with highest incomes, and those making the greatest profits, to pay a larger share. The Autumn Statement reduces the 45% tax threshold from £150,000 to £125,140, increasing taxes for high earners. In reality, the largest single contributor to increasing tax inflows for HMRC will be the ongoing freeze of thresholds and allowances for income tax, national insurance and inheritance tax. Already frozen to April 2026 in previous announcements, they are all now extended to April 2028. With inflation high and household incomes on the rise, everyone can expect to be paying more tax in the future with frozen tax thresholds in place. It is less clear how this approach fits Hunts’ claim of fairness and seeking funding from ‘ the highest earners’.
The government will also reduce the Dividend Allowance, and Capital Gains Tax Annual Exempt Amount, which will both impact the majority of our clients. It is now more important than ever to have a carefully considered strategy for maximising usage of these tax allowances, as reducing tax paid means more income/growth can be retained for funding your own objectives.
Set against the backdrop of Kwasi Kwarteng’s announcements in September, Jeremy Hunt’s budget is a complete reversal of the promised ‘tax cuts to unleash growth’.
What does the Autumn Statement 2022 mean for you?
Our full guide to the Autumn Statement gives a full breakdown of the chancellor’s tax rises and spending cuts. Please do take a moment to read our guide, and reflect on the changes which may impact you and your family.
We have identified financial planning ‘threats and opportunities’ and will raise anything which may change your financial plan when we next meet. If there is anything in particular you you would like to discuss sooner, please do contact your lead planner.
To download our full guide, click the image below:
