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The Autumn Finance Bill 2022 was published last week, legislating for key tax changes announced by the Chancellor in the Autumn Statement.
- The Energy Profits Levy (EPL) is being extended to help fund cost of living support and ensure oil and gas companies pay their fair share of tax. The rate of tax applied to the profits of oil and gas companies is increasing from 25% to 35% and the sunset clause changing to March 2028 rather than December 2025. This measure also reduces the investment allowance from 80% to 29%, except for investment expenditure on upstream decarbonisation, where it will remain at 80%. This broadly maintains the existing cash value of total tax relief for non-decarbonisation investments.
- The threshold for the additional rate of income tax will be lowered from £150,000 to £125,140.
- The Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024, and the Capital Gains Tax (CGT) annual exempt amount will be reduced from £12,300 to £6,000 in April 2023, and £3,000 in April 2024.
- Introducing Vehicle Excise Duty (VED) for Electric Vehicles (EVs) from April 2025. This aligns their taxation with that of petrol and diesel vehicles, reflecting their permanent role in the net-zero economy of the future. Alongside this, the government will provide certainty on favourable Company Car Tax rates for electric cars until 2028.
- Income Tax thresholds will remain fixed at their current levels until 2028, an extension of two years.
- The current thresholds for inheritance tax will also remain in place until 2028, an extension of two years.
- Research and development (R&D) tax reliefs will be reformed to make sure taxpayers’ money is spent as effectively as possible, including by reducing error and fraud. From 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will be increased to 20% from 13%, the SME deduction rate will be reduced to 86% from 130%, and the Small and Medium Enterprise credit rate decreased to 10% from 14.5%.
The main Spring Finance Bill 2023 will follow the Spring Budget in the usual way, for remaining tax measures needed ahead of April 2023. Please talk to us about how the measures affect you and we will be delighted to help.