Autumn Statement charts a tricky course

Autumn Statement charts a tricky course

Houses of parliament


James Gladstone
Head of Wealth Planning

In Greek mythology, Odysseus was faced with an unenviable choice when sailing across the Strait of Messina. Take one route and lose six of his men to a sea-monster; take another and lose his entire crew and ship. Whilst the right choice might seem obvious, the Chancellor of the Exchequer may have felt like he was in a similar position, forced to choose between alienating voters struggling with soaring prices and a wary, easily-spooked bond market. Therefore, in the context of the current economic climate, this Budget was always going to be measured by how bad it was, as opposed to how good.

The hole in the public finances is huge and hammering tax rises were anticipated across the board. On this basis, it wasn’t as bad as it could have been, with a couple of large hammers, aimed primarily at energy companies and higher earners, appearing to have won out over many smaller ones.

From a personal taxation perspective, high earners and the wealthy appear to have been hit the hardest, with the reduction in the additional rate income tax threshold from £150,000 to £125,140.

This rather arbitrary number is carefully chosen to actually reduce the number of marginal steps in the income tax table. This is best illustrated in the table below, which shows the impact of the tapered loss of the personal allowance for those earning more than £100,000:

Earnings BandIncome Tax Rate (effective)
up to £12,5400%
£12,541 - £50,27020%
£50,271 - £100,00040%
£100,001 - £125,140(60%)
£125,141 and above45%

However, neatness was not the motivation. This tax increase is anticipated to deliver much needed revenue - but perhaps considerably more in political capital. September’s disastrous mini-budget, which dramatically favoured the wealthy, left a sour taste for many. With an election less than two years away, action to offset this was inevitable.

A widely anticipated increase in Capital Gains Tax did not materialise. However, a significant reduction in the annual CGT allowance from £12,300 to £6,000 in April and then £3,000 in 2024 means that this tax will generate significantly more revenue in the future from a much broader cohort of taxpayers.

When paired with a freeze of tax thresholds and very high inflation, the above means that the burden of taxation is going to go up over the short to medium term. If you take the longer-term promises of lower tax rates at face value, this increase may only be temporary.

This lends itself to sensible financial planning that defers income and gains to a point in the future when it may be more attractive to draw them down. A variety of relatively simple solutions exist for such planning and I encourage you to speak to your Wealth Planner about your options.

Other pre-planned rises, such as that to corporation tax – increasing from 19% to 25% from April 2023 – will impact those holding investments through a corporate structure. Consideration should be given to how investments are held within a company, as much as for individually-held investments. There are options available to promote efficiency.

Faced with a “Hobson’s choice”, it was inevitable that the Chancellor was going to leave some feeling a little bruised. However, he also seems hopeful that many, who may have avoided the initial sting of higher taxes, will, like the frog that sits in the pan of water, perhaps not notice when they get gradually boiled.

Key changes in the Autumn Statement

  • Additional rate threshold for income tax reduced (currently £150,000, falling to £125,140 from April 2023)
  • CGT allowance reduced (currently £12,300, falling to £6,000 in April 2023 and £3,000 in April 2024)
  • Dividend allowance reduced (currently £2,000, falling to £1,000 in April 2023 and £500 in April 2004)
  • 1.25% increase in tax on dividends remains in place (announced 2021)
  • “Nil rate band” (IHT exempt amount) frozen at £325,000 for further two years to April 2028
  • Increase to corporation tax from 19% to 25% from April 2023 remains

…and some mooted changes that did not materialise

  • Income and capital gains tax rates remain the same
  • Pension lifetime allowance and annual allowances were unchanged 
  • IHT reliefs such for business property and agricultural property remain in place
  • There were no changes to the taxation of trusts

Statements concerning taxation are based on our understanding of the taxation law in force at the time of publication. The levels and bases of, and reliefs from, taxation may change. You should obtain professional advice on taxation where appropriate before proceeding with any investment.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


James Gladstone
Head of Wealth Planning


The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.