Rishi Sunak promised a budget for a new post-Covid economy and only time will tell whether that promise is delivered. However, the expectation was for minimal changes to income tax and Capital Gains Tax. After all, it hasn’t been long since the Government’s major overhaul of National Insurance Contributions and the change to tax on dividends.
Income Tax and Capital Gains Tax
The anticipated minimal announcements on Capital Gains Tax and income tax rates were mis founded, there were in fact, none!
The only major change came to the administration of reporting Capital Gains Tax on the disposal of UK residential property. Previously, this was required to be reported – and the tax paid – within 30 days. Effective from today, this has now been extended to 60 days. We will produce a more detailed update on the implications of this change over the next few days.
Tax free thresholds remain frozen. The capital gains annual exemption remains at £12,300, with the individual income tax personal allowance remaining frozen at £12,570. Each of these are slated to remain set until 2026 and not rise in line with inflation.
Similarly, the 0% starting rate for savings income will remain at £5,000 for 2022/23.
All tax bandings and rates will remain unchanged for 2022/23, other than the changes to tax on dividends and National Insurance Contributions which were previously outlined.
However, Scottish income tax rates still apply to non-savings income for Scottish residents, and the changes in that regard from earlier this year can be found here.
The ISA annual subscription limits have also remained set for 2022/23. The adult limit is unchanged at £20,000, with the Junior limit remaining at £9,000.
Other Taxes
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- The lifetime limit of Annual Investment Allowance will continue at the temporary level of £1million until 31 March 2023, rather than December 2021
- The rises in council tax are expected to continue at similar rates until 2026/27
- The previously announced rise in corporation tax from 19% to 25% will still take place in 2023/24
- The lifetime limit of Annual Investment Allowance will continue at the temporary level of £1million until 31 March 2023, rather than December 2021
Conclusion
This was a very quiet budget for direct taxes, with the Chancellor perhaps distracted by rewriting alcohol duty, cutting air passenger duty for domestic flights and rewarding ships for flying the Union Jack.
Murray Beith Murray, Edinburgh
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