As part of his Autumn Statement, Chancellor Jeremy Hunt announced a slew of tax freezes and spending cuts to "stabilise" the British economy as it enters a period of recession.
Speaking to the House of Commons on 17 November, the Chancellor set out his action plan to plug a £55 billion "black hole" in public spending to keep to the Government's rules about lowering debt as a percentage of GDP in the near future.
Hunt told his peers that there would be spending cuts worth up to £30bn and tax rises totalling £25bn, which he had described as a "difficult decision".
Personal announcements
The Chancellor began by lowering the additional-rate tax band threshold (something his predecessor Kwasi Kwarteng wanted to scrap entirely) from £150,000 to £125,140.
This threshold decrease will come into effect from April 2023 and is expected to last until 2027/28.
The Government expects this change will mean an additional 232,000 people will start paying additional rate income tax, representing a £1,236 average cash loss in the 2023/24 tax year.
Hunt also announced the Government's plans to cut the annual exemption allowance for capital gains tax from £12,300 to £6,000 in April 2023 and cut again to £3,000 in April 2024.
Along with changes to the dividends allowance, which will be halved in April 2023 to £1,000 and halved again in April 2024 to £500, the Government expects to raise £1.2bn a year.
Business announcements
However, Hunt also announced measures to support businesses across the country.
Most of the support will come in the form of business rates support, such as a rates bill cap of £600 and an uplift of rates relief for certain businesses from 50% to 75%.
The business rates relief package is worth £500m to protect 80,000 small businesses from the business rates revaluation in 2023.
The Chancellor also announced the additional deduction for SME R&D relief would be decreased from 130% to 86%, while the SME credit rate will be lowered from 14.5% to 10%.
Meanwhile, the R&D expenditure credit for large companies will increase from 13% to 20%, which the Treasury said was a way of "rebalancing" the two schemes.
Industry reactions
The Autumn Statement was met with both praise and disappointment from a range of industry specialists.
Torsten Bell, chief executive of the think-tank The Resolution Foundation, said the tax threshold cuts were "disproportionately aimed at middle to higher-earning households".
He added:
"While significant spending cuts were only pencilled in for after the next election and are unlikely to be delivered on the scale envisaged.
"Stepping back, the UK government has gone from announcing the biggest tax cuts in 50 years to the biggest tightening since 2010 in just a few weeks."
Kitty Ussher, chief economist at the Institute for Directors (IoD), praised the support set out for businesses.
"Business leaders were so dismayed by the fall-out from September's mini-budget that the bar for judging today's announcement was set pretty low.
"To that end, it was good to see joined-up working between the OBR and the Treasury this time around
"On tax, while low rates are always welcome, we understand that it was proportionate to announce in March 2021 that corporation tax should rise in April 2023 to pay for the pandemic.
"We are pleased that the headline rate of employer National Insurance contributions has been maintained at its lower rate."
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