The Autumn Statement: What does it mean for you?

The Chancellor of the Exchequer Jeremy Hunt has today announced the Government’s Autumn Statement for 2022.

Among the measures outlined in the Autumn Statement he has frozen current income tax rates for low and basic rates until 2028, whilst reducing the additional rate tax threshold for higher earners. National Insurance thresholds have also been frozen, while public spending is to be bolstered with an extra £3.3bn for the NHS over the next two years. Also, electric vehicles will start to be levied from April 2025 when they will begin to incur road taxes. The National Living Wage is set to jump up to £10.42, rising 9.7%. The most significant new business tax announcement was the confirmation of a levy on energy firms – hitting both oil and gas firms, but also renewable electricity generators through the Electricity Generator Levy, targeted to raise £14bn by 2028.

The Autumn Statement will impact many people across various industries in the U.K. We have highlighted the main areas that could potentially impact the hospitality sector.

Business rates

•  A £1.6billion Transitional Relief scheme has been announced in attempt to limit how much your bill for business rates can change each year over the next five years as a result of revaluing these rates.
• There will be a revaluation of business rates in April 2023. Effectively this measure seeks to provide stability for businesses through keeping their rates capped, and transparent – so business owners should know exactly what they’re expected to pay and shouldn’t be faced with surprise significant rises. Some businesses will benefit from lower bills as a result of this revaluation, therefore will pay lesser rates.
• Hospitality relief will continue for a further year and will be increased to 75% but is still capped per business.
• Small businesses that lose their eligibility to apply for Small Business or Rural Rate Relief due to the revaluation will have their bill increases capped at £50 a month.

Dividends

• The dividend allowance refers to the amount of money you can receive each year in dividends, if you own shares, before paying tax) will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.
• For businesses who adopt a policy of paying employees a mixture of wage and dividends, this means there is less of a financial benefit to owning your own company.
• Employees will pay higher tax on the dividends they receive so effectively will get paid less. This means less income for both business owners and employees, so employees will want to get paid more in wages, potentially incurring further financial strain on business owners.

Benefits

• Working age benefits are set to rise by 10.1%, in line with current inflation rates. Coming into effect in April, this effectively means those on Universal Credit and claiming benefits could receive more money.
• There will be the highest ever increase in National Living Wage for people aged 23 with a wage rise by 9.7% to £10.42 from April next year. This means that eligible workers will earn more per hour for the work they do, but the flipside of this is the work will be more expensive for businesses and business owners, who in attempt to keep their running costs down may look to streamline their staff.

Energy

• The Energy Price Guarantee currently in place, has instilled a cap that means that a household using a typical amount of energy pay £2,500 a year. The cap was due to expire in April, however it is now being extended a further 12 months but will increase to £3,000 a year.
• There has however been no update or announcement regarding the Energy Bill Relief Scheme currently in place to provide support for businesses. The current scheme is due to end in March 2023. As of yet, no further support beyond this has been announced.

Social rented sector

• Social housing rent increases in England will be capped at 7% from next April, instead of rising to 11% in line with inflation as was predicted. This means the average tenant will save £200 across the year.

How do you feel about the Autumn statement and the measures that have been announced? Email us and let us know your thoughts:

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You can read the Autumn Statement in full here and stay up to date with all other industry news here.