Another Day, Another Budget: The UK Government’s Autumn Statement 2022

Here is a summary of some of the key tax measures in the Autumn Statement:

• Energy Sector “Windfall Taxes”
  • The Energy Profits Levy (“EPL”) was introduced with effect from May this year as an additional 25% levy on, broadly speaking, oil and gas producers’ ring-fence profits, with a generous allowance for certain investment expenditure. The EPL was to end on 31 December 2025 and could potentially have been phased out prior to that date following Government review. In the Autumn Statement, it was announced that the EPL rate will increase from 25% to 35% with effect from January 2023 and will end on 31 March 2028 with no prospect of being phased out earlier.
  • A new “electricity generator levy” will be introduced that will be payable by companies or groups that undertake electricity generation in the UK from nuclear, renewable and/or biomass sources. The levy will be charged at the rate of 45% on “exceptional generation receipts”, i.e. revenue (rather than profits) from electricity generated in the UK in excess of a benchmark and which exceeds £10 million per year. The levy will be imposed beginning 1 January 2023 and is intended to be temporary with an end date of 31 March 2028.

• Individual Taxation
  • The 45% income tax rate threshold will be reduced from £150,000 to £125,140 from 6 April 2023. As a result, an individual earning £150,000 per year will pay an extra £104 per month. Other income tax rate thresholds and NICs thresholds have been frozen until April 2028, two more years than originally planned.
  • Tax-free allowances will be cut:
    • The capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from 6 April 2023, and will reduce again to £3,000 from 6 April 2024.
    • The dividend allowance will be reduced from £2,000 to £1,000 from 6 April 2023, and will reduce again to £500 from 6 April 2024.
  • There has been widespread speculation about changes to the UK resident but non-domiciled tax status in the UK. The Autumn Statement contained only one change in this area, and Finance Bill 2023 will include legislation that in certain circumstances will deem shares and securities in a non-UK company acquired in exchange for securities in a UK close company to be treated as “located” in the UK. This will have effect where an individual has a material interest in both the UK and the non-UK company where the share exchange is carried out on or after 17 November 2022.

• Online Sales Tax: Earlier this year, the Treasury consulted on whether the Government should introduce an “online sales tax”. This measure, despite potentially being a revenue-raiser during economically straitened times, has now been abandoned.
• Stamp Duty Land Tax (SDLT): In the 23 September 2022 Growth Plan, the Government announced measures to help buyers of residential property. These include (i) doubling of the rate at which a person begins paying SDLT from £125,000 to £250,000; (ii) increasing the level at which a first-time buyer would pay stamp duty from £300,000 to £425,000; and (iii) first-time buyer relief for homes costing less than £625,000 rather than the current £500,000. These changes, which came into effect on 23 September, will now be temporary, to remain in place until 31 March 2025.

If you have any questions about any of the above measures, please contact Peita Menon, Paul Harrington or Byul Han.