SMALL businesses, self-employed Brits and savers are among the losers from the Autumn Statement.
Jeremy Hunt today confirmed a raft of changes to inheritance tax thresholds as well as VAT and dividends.
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As the cost of living rages on, Hunt used the statement to give more support to vulnerable and hard-up households.
New £900 cost of living payments will go to Brits on means-tested benefits, £300 will go to pensioners while households on disability benefits will get £150 each.
The state pension and other benefits will also rise in line with September’s inflation rate of 10.1%.
Meanwhile, Hunt’s frozen various tax thresholds to boost government coffers after the pandemic and to help pay for the support schemes.
Hunt said during the Autumn Statement: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
“So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.
“Our priorities are stability, growth, and public services.”
Below we round up what you need to know about inheritance tax, dividends and VAT.
It comes as Mr Hunt also announced:
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Held inheritance tax thresholds
The rate at which families start paying inheritance tax has been frozen since 2009, and it was today extended by two years until April 2028.
This will force more and more households to pay the tax as house prices and inflation continues to soar.
The threshold currently stands at £325,000 with a further residential nil rate band set at £175,000.
These thresholds can be transferred to a spouse or civil partner giving them an IHT threshold of £1million.
Had the rate kept up with inflation, the starting point where you pay tax would be £460,000 instead of £325,000, according to MCL Accountants.
Between April 2022 and September 2022, the Treasury collected £3.5billion from IHT – £400million more than in the same period last year.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “IHT used to be seen as a wealthy person’s tax, but a mix of booming house prices and threshold freezes mean this is no longer the case.”
While Myron Jobson, senior personal finance analyst, at Interactive Investor, added ahead of the statement: “The revenue will prove useful to the government to address its colossal spend on coronavirus and cost-of-living support measures.”
Slashed dividend allowance
You may get a dividend payment if you own shares in a company, and you can earn a certain amount without paying tax.
However, in a blow by Hunt today, the dividend allowance will be halved from £2,000 to £1,000 next year.
It’ll then be halved again to £500 from April 2024.
This means millions of taxpayers will start paying taxes sooner, including pensioners, self-employed and business owners who pay themselves in dividends.
The dividend allowance has been held at £2,000 in the previous six tax years.
How much tax you’ll pay on dividends above the allowance depends on your income tax band.
For example, basic rate taxpayers pay an 8.75% rate, higher rate earners pay 33.75% and additional rate Brits pay 39.35%.
VAT freeze extended
Hunt also announced the threshold at which businesses must register to pay VAT will be held at £85,000 until 2026.
This means thousands more small businesses will pay the tax as their turnover increases in line with rising prices.
The threshold was already frozen at 2024, but it has been extended by another two years.
Earlier in November, a major tax change gave millions of people a pay rise.
Meanwhile, millions of others have been hit with a pay cut due to another announcement by Hunt.
This post first appeared on thesun.co.uk
