Autumn Statement 2022 - Key points

Chancellor Jeremey Hunt recently unveiled his plan to improve and eventually fix the UK economy within his Autumn Statement. The statement includes some big decisions, including increases to taxation and spending cuts equalling billions of pounds. Here is a summary of the key takeaways from the Autumn Statement.

Wages, pensions and tax

The minimum wage for people over the age of 23 will increase by 92 pence per hour, now up to £10.50. This change won’t come into effect until April 2023. The state pension and means-tested disability payments will also increase in line with the rate of inflation at 10.1%.

These increases will be offset by several changes to personal income tax, capital gains tax and council tax, namely:

1. Annual earnings over £125,140 will now be subject to the higher 45% tax rate (except for Scotland), which was previously reserved for earnings above £150,000. 
2. The income tax personal allowance, National Insurance thresholds and inheritance tax thresholds will all be frozen until 2028 
3. The tax-free allowances on dividends and capital gains income will be reduced 
4. Local councils across England will be allowed to increase council tax by 5% per year instead of 3% without putting it to a vote.

Energy bills and energy companies

The government has pledged to extend support for households to pay energy bills, extending the end date past April 2023. Yet, overall, the support provided is less generous. Households receiving means-tested benefits are to receive a £900 payment to help cover energy costs, whereas pensioners will receive £300 and some individuals on disability benefits will get £150.

On top of the support announced for energy consumers, the UK government has targeted energy companies. A new energy tax of 45% will be applied to energy companies generating electricity. And an energy company windfall tax will increase by 10% to 35%, which is also extended until 2028.

Government spending

The overall plan for government spending is to maintain the level of spending at current levels until 2025 but then grow spending more slowly than initially planned. However, both the NHS and schools will receive increased investment over the next two years, each receiving £3.3 billion and £2.3 billion, respectively. Spending on defence will stay at 2% of national income, which is a target set by NATO. The official target for overseas aid is set at 0.7%, but this figure will continue to be missed for the following five years as it’s being kept at 0.5%.

Support for businesses 

A comprehensive support package will be available for businesses that includes relief and freezes. The total cost of this support will equate to £13.6 billion over five years. Moreover, some import taxes have been abolished on more than 100 products and goods, including some types of food. This will remain in place for two years. Talk of a possible online sales tax has also been scrapped with the government identifying warehouses will see increased costs from changes to business rates.

December 2022