2023 Tax Allowances Frozen
There are numerous tax allowances that have been frozen as a result of the November 2022 Autumn Statement. These include the following:
Personal allowance will remain at £12,570 and the point at which individuals become liable for the higher rate of 40% will remain at £50,270, in both cases until April 2028.
The main National Insurance thresholds will remain frozen until April 2028.
Inheritance Tax nil rate bands will remain frozen until April 2028. The nil-rate band is frozen at £325,000, the residence nil-rate at £175,000, and the residence nil-rate band taper will continue to start al £2 million.
VAT threshold will maintain al £85,000 to March 2026.
As wages are increasing in an attempt to combat soaring inflation, you’ll notice that you’ll be paying more tax on your earnings, with more of the population being pushed over the £50,270 threshold that is mentioned above as frozen, making them liable for the 40% income tax rate on earnings above the £50,270.
At the same time, those that are self-employed or owners of a business may have been forced to increase their selling prices due to the increased costs we are seeing. As a result of this, business owners and the self-employed who are not VAT registered will need to be constantly reviewing their annual total VAT taxable turnover. If this is going to go over the £85,000 threshold in the next 30 days after review then VAT registration will be required, which we are more than happy to assist you with.