Autumn Budget 2022: Key points at a glance
Last Thursday (17th November), the UK Government’s Autumn Budget was delivered by the Chancellor of the Exchequer, Jeremy Hunt.
The announcement was made on the same day that the Office of Budget Responsibility (OBR) said that the country had tipped into recession, and many of the measures to be introduced are intended to stabilise and begin mending the economy.
To get you up to speed with everything announced in the Budget, we’ve put together a quick round-up of the key points.
How is the UK economy doing?
As part of the Budget, Jeremy Hunt provided an update on the state of the UK’s economy and public finances:
- The Chancellor confirmed the OBR announcement that the UK is now entering a recession (when the economy shrinks for two consecutive quarters).
- Growth for 2022 is predicted to be 4.2% overall, however the economy will shrink by 1.4% next year. Subsequent years are forecast to see growth of 1.3% (2024), 2.6% (2025) and 2.7% (2026).
- The UK’s inflation rate is expected to be 9.1% for 2022 and 7.4% in 2023.
- The Government has adjusted the time frame to hit its debt and spending target from three years to five.
Taxes and wages
- The National Living Wage (for people aged 23 and over) will increase from £9.50 to £10.42 per hour from 1st April 2023.
- Means-tested and disability benefits, as well as state pension payments, will see an increase of 10.1%, which is in line with inflation.
- Top 45% additional rate of Income Tax will be paid on earnings over £125,140 — rather than £150,000 (not applicable in Scotland).
- The Income Tax Personal Allowance and higher rate thresholds will be frozen for a further two years until April 2028. They were already frozen until April 2026.
- The National Insurance and Inheritance Tax thresholds will also be frozen until April 2028. They were already frozen until April 2026.
- Tax-free allowance for Dividend Tax will be cut in 2023 (to £1,000) and 2024 (to £500). Capital Gains Tax will also be cut in 2023 (to £6,000) and 2024 (£3,000).
- Local councils (England) will have scope to increase Council Tax by up to 5% a year without needing a local vote — the cap is currently 3%.
- The energy price cap for households will be extended for one year beyond April 2023 but the cap will be increased from £2,500 to £3,000.
- Support payments of £900 will be paid to those on means-tested benefits, £300 paid to pensioner households and £150 to those on disability benefits.
- The Energy Profits Levy — a windfall tax on oil and gas firm profits — will be increased from 25% to 35% and extended to March 2028.
- A windfall tax of 45% on the profits of firms that generate electricity, including those from renewable sources, will be introduced from January 2023.
- Public spending that has already been planned will be maintained until 2025, but will grow at a slower rate beyond.
- In England, the NHS budget will grow by £3.3 billion per year and spending on schools will grow by £2.3 billion per year, both for the next two years.
- Larger payments will be made to devolved governments of the UK for the NHS and schools: £1.5 billion for the Scottish Government; £1.2 billion for the Welsh Government and £650m for the Northern Ireland Executive.
- Defence spending will be maintained at the NATO target of 2%.
- Overseas spending will be maintained at 0.5% for the next five years.
Business and infrastructure
- £13.6 billion in support will be provided to firms to assist with business rates, delivered via a mix of freezes and reliefs.
- Import Tax will be removed on over 100 goods, including food products, for the next two years.
- A planned Online Sale Tax has been cancelled.
- A review will be set up to look at how post-Brexit regulation can better support emerging technology — it will be led by Sir Patrick Vallance.
- The lifetime cap on social care costs (England only) will be delayed by two years.
- Social housing rent increases to be capped at 7% from April 2023 (England only).
- Electric vehicles will pay Road Tax from April 2025.
For in-depth details of the announcements and figures, the full Autumn Budget Statement is available on the UK Government website here.