Personal Taxes

The income tax additional rate threshold (ART) will be lowered from £150,000 to £125,140 from 6 April 2023. The ART for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. The ART for savings and dividend income will apply UK-wide. 

Despite speculation of a possible increase in dividend tax rates to align more closely with income tax rates, the only change announced is the reduction in the dividend allowance from £2,000 to £1,000 with effect from April 2023, and to £500 from April 2024. 

The inheritance tax nil-rate bands were previously set at current levels until April 2026 (£325,000 nilrate band and £175,000 residence nil-rate band). These will now stay fixed for a further two years until April 2028. The residence nil-rate band taper will continue to start at £2 million. Qualifying estates can pass on up to £500,000 of unutilised nil-rate band value on death to a surviving spouse. The qualifying estate of the surviving spouse can avail of up to £1 million of aggregate nil-rate bands before incurring an inheritance tax liability. 

Despite concerns of restrictions to IHT reliefs (and in particular the Business Property Relief regime), no changes were announced to existing IHT reliefs or rates.

The capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. There are no other material changes to the current CGT regime and all current rates and reliefs remain unchanged. 

The Chancellor has introduced a new piece of anti-avoidance legislation for UK resident non-domiciled individuals. The new provision restricts access to the remittance basis of taxation on future CGT disposals and income distributions where a share exchange has taken place under which shares or securities in a UK close company are exchanged for an equivalent holding of securities in a non-UK company. The measure will have effect for share exchanges which take place on or after 17 November 2022. The restriction to the remittance basis will be achieved by treating the new holding of securities in the non-UK company as UK situs property. 

On 23 September 2022, the government increased the nil-rate threshold of Stamp Duty Land Tax (SDLT) from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland. The nil-rate threshold available to first-time buyers was increased from £300,000 to £425,000 at the same time. These increased SDLT thresholds will now remain in place until 31 March 2025.