The Autumn Statement delivered by Chancellor Jeremy Hunt will come as a blow to small business owners. The dividend allowance that allows the first £2,000 to escape tax will be reduced to £1,000 in 2023 and then to £500 in 2024. It should also be remembered that whilst the NI increase of 1.25% was reversed earlier in the year the dividend tax increase was not so the rates are still 8.75%, 33.75% and 39.35%. This will bring in many more people into the self assessment regime and having to complete annual tax returns as the dividend allowance was originally introduced to stop individuals with small shareholdings and dividends from having to complete tax returns.
The Chancellor also cut the threshold at which individuals pay the additional rate of income tax (45%) from £150,000 to £125,140, which is the point at which individuals will have lost their personal allowance in full.
Changes to capital gains tax and, in particular, a reduction in the annual exemption for capital gains tax has been muted for a number of years. Now it has finally come to fruition. The annual exemption for capital gains tax will reduce to £6,000 from April 2023 and then to £3,000 from April 2024. This change will bring even more people into the scope to have to complete returns for what many would see as relatively small capital gains and possibly one-off events.
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