"I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years taking us to April 2028."
Chancellor Jeremy Hunt has made a series of tax announcement's in today's Autumn Statement.
He said: "I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years taking us to April 2028."
Tax free allowance for capital gains will be cut from £12,000 to £6,000 from April 2023 and £3,000 from April 2024 and the tax-free dividend allowance will be reduced to £1,000 in 2023-24.
The freezing of tax thresholds, alongside other stealth tax rises, is estimated to raise around £35bn a year for the government by 2028, according to the IFS.
In today's Autumn Statement, Hunt also announced that the 45p rate threshold will be reduced from £150,000 to £125,000, dragging more people into the highest rate of tax.
Hunt said the change will mean higher earners pay around £1,200 a year a more in tax and is expected to pull an extra 250,000 people into the top bracket.
Linda Wallace, director of Wesleyan Financial Services, said: “Inheritance tax has once again been raided for the Treasury’s coffers. The threshold for paying inheritance tax has been frozen since 2009. Not only does this mean it has not kept pace with inflation but, owing to rising property prices, more and more people are falling within its grasp.
“While £325,000 may sound a lot, those who own property are likely to find they are close to, or exceed this limit, and may not be able to leave their loved ones as much as they’d hoped when the time comes. There are ways to gift some money tax free, and making the most of these allowances is the only way to reduce the eventual tax burden.”
Kay Westgarth, sales director at Standard Life Home Finance, commented: “The Government’s decision to freeze the inheritance tax threshold for two more years, which essentially amounts to a rise on future inheritance tax, was expected by many but will be welcomed by few, with more people finding themselves sitting above the tax threshold when it comes to the value of their estates. Having set the nil-rate band at £325,000 in 2010, even the introduction of the nil-rate residential band in 2017 will not stop some ordinary homeowners from needing to pay inheritance tax.
“Indeed, older people in London and the South East who may have benefitted from a buoyant housing market are going to find themselves penalised by geography and worrying about what they can leave their loved ones. Over-55s who think this might impact them should speak to an adviser to ensure they are taking advantage of all their allowances to support their families when it matters the most. Whether that is helping them get on the property ladder by releasing housing equity via a later life lending product or ensuring that couples use their full joint allowance, there are plenty of options to ensure that people aren’t unfairly penalised.”
