Autumn Statement 2022 – what does it mean for income tax?

BOSS Federation analyse the autumn statement from chancellor, Jeremy Hunt

According to the OBR, the UK has now tipped into recession (in other words, the economy’s slowed for two quarters in a row). Expect a reduction in Gross Domestic Product (GDP), house prices, employment and disposable incomes in 2023.

The Statement started against a backdrop of new inflation figures released yesterday, showing inflation at its highest since 1981, and ended with the pound taking a slight wobble, but share prices holding steady as markets reacted to the sombre but expected news.

Income tax thresholds were already frozen at £12,570 (basic rate) and £50,270 (higher rate). These thresholds have been extended to 2028, so no extra money in our pockets for another several years, via the income tax mechanism at least. This also means pay rises over the next five years are more likely to drag people into the higher rate bracket of 40%, as the thresholds won’t keep up.

Those who earn more than £125,140 will now be subject to the highest rate of income tax (45%) whereas previously an individual had to earn £150,000 to tip into this bracket. As a result, higher earners will pay around £1200 more in income tax.

These changes kick in from April 2023.