Lawyers comment on Chancellor’s Autumn Statement

by | Nov 21, 2022

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Chancellor Hunt’s Autumn Statement has been one of the most significant fiscal events in over a decade. Law firms have been sharing their reactions to some of the Chancellor’s announcements as follows:

Commenting on the Autumn Statement and its impact on the liability driven investments (LDI) market, partner at law firm RPC, Rachael Healey, said:

“All eyes today have been on the gilts market to see if there was a similar reaction to the September mini-budget which led to a so-called “doom-loop” – and with that an impact on the liability driven investments (LDI) market. 

The immediate market reaction to the Autumn statement has been relatively stable with no knock-on effect as seen in September. 


This will come as a welcome relief for LDI fund managers and trustees of final salary schemes alike given the unprecedented movement in gilt yields in September and particularly for those schemes that do not have the liquidity or have otherwise had the opportunity to put hedges back in place. 

We will have to wait however to see whether the stability continues as the market takes in the detail of the Autumn statement.

Stuart Crippin, Partner at Seddons, comments:


This Autumn Statement is likely to be seen as firm but fair with a focus on taxing the wealthy more. There is a noticeable more populist shift from the brief Liz Truss era. The Statement did not contain any big surprises and, arguably, could have been more swingeing. For instance, there was no attack on the tax treatment of non-UK domiciled individuals who had been seen as a quite likely target.

That said, there will have been a rollercoaster of emotions for additional rate Income Tax payers who, just a couple of weeks ago, thought they were being handed a tax cut and now face a tax hike!

“It is interesting that the Chancellor resisted the temptation to increase CGT rates which, coupled with the Income Tax rises, would have made quite gloomy headlines. Certainly, the forthcoming reduction in the CGT annual allowance does allow for imminent planning opportunities for those sitting on assets which have increased in value.


“The freezing of the IHT nil rate band for a further two years, whilst not hugely significant in itself, just highlights the importance of timely IHT and estate planning generally.”

Rebecca Fisher, Partner in the Private Client team at Russell-Cooke, comments:

“Although no increase in the rate of tax, the reduction or freezing of allowances will have a significant impact.


“The tax free sum for inheritance tax remains at £325,000 until 2028.  That will be a freeze on the inheritance tax threshold for 19 years!  To put that in context the average house price in England in April 2009 was £160,701 – as at August 2022 it is £296,000.  That is approximately an 84% increase.  If the nil-rate band was increased in line with house prices then that would result in a nil rate band of £598,000.  That gives some indication of the impact that house prices have on a static nil rate band. 

“The biggest change sees the cutting of the annual exemption for capital gains tax – this is currently £12,300 for individuals and £6,150 for trustees.  From 6 April 2023 it will be £6,000 and further reduced to £3,000 in 2024.  For trusts, the rate will be half the annual exemption – so £3,000 in 2023 and £1,500 in 2024.  Overall this mean that more people will be paying more capital gains tax and with it, potentially more compliance and reporting obligations.  Many commentators were certain that we would see an overall increase in the rate of CGT but that was not the case. 

“In the Treasury’s policy costings the CGT allowance reduction estimates additional revenue of £275m by 2024/25 rising to £440m by 2027/28.  What remains to be seen is the impact that these rates will have on behaviours.  The combination of a recession, a fall in the stock market and a possible stagnant property market may lead to very limited activity and disposals.  I would also imagine we will see more disposals before the end of the tax year to take advantage of the higher allowance.


“This reduction in the CGT rate means that the proposed changes to capital gains tax on divorce are all the more welcome.  The Finance Bill 2023 extends the no gain/no loss treatment for divorcing couples.  At present, any transfers have to be completed within the tax year of separation to get NG/NL treatment.  From 6 April 2023 this period is extended for an unlimited period of time if the transfer is in connection with a formal divorce agreement.   Had the changes not been proposed then an even greater number of individuals would have been brought into the tax net as a result of family breakdown.”

Antoaneta Proctor, partner at Wedlake Bell comments:

Freezing inheritance tax relief – £500m


“Inheritance tax (IHT), and its predecessor taxes, were historically intended to tax only the wealthiest sectors of society. This is no longer the case. With the freezing of the nil-rate band at £325,000 since 2009 – a policy which the Chancellor has announced will now continue until April 2028 – the tax net has been cast far more widely, bringing within scope anyone who owns an averagely-priced property, particularly in London and the South-East. Coupled with the fact that IHT is payable on the value of assets purchased during lifetime from after-tax funds, there is a real perception of unfairness. With more people affected by IHT, this sentiment is only likely to grow.”

Cutting capital gains tax allowance – £1.8bn

Following the OTS’s recommendations in November 2020 to more closely align the rates of income tax and CGT, and given the government’s need to raise revenue, changes in the CGT regime have been widely anticipated. The fact that such changes have come in the guise of a reduction in the CGT annual exemption from £12,300 currently to £6,000 in April 2023, going down to £3,000 in April 2024, is welcome news to those keen to ensure that tax rises do not stifle growth in the economy and disincentivise investment. With taxpayers controlling the timing of disposals, however, the impact of this measure may not meet the government’s revenue raising expectations.”

Lorna du Sautoy, Legal Director, BDB Pitmans comments:

“The Chancellor’s reduction of the annual exemption rate for capital gains (from £12,300 to £6,000 next year and £3,000 from April 2024) will primarily affect private residential landlords and second home owners by bringing more property transactions within the scope of a tax bill on sale. We should expect some turbulence if enough landlords react by deciding to sell off their portfolios before the relevant tax years commence also causing prices to fall.

Against a back drop of rising rents and falling property prices the Chancellor’s reversal of the mini-budget stamp duty cuts (from 31 March 2025) becomes an effective way to boost tax returns on property transactions in the short to medium term though many will wonder how the private rented sector will cope particularly in areas where rental housing supply is already squeezed.”

Marilyn McKeever, Partner at BDB Pitmans comments:

“There were few surprises in Jeremy Hunt’s Autumn Statement with many, but not all, of the predictions turning out to be true. Non-domiciled individuals will heave a sigh of relief as there is no indication of any changes or limitations to the existing rules. There were also widespread suggestions that the Chancellor would increase capital gains tax rates, even aligning them with income tax rates. He did not do so. Those with gain heavy assets can also heave a sigh of relief.

So what has the Chancellor done? His mantra was that he would “ask more of those who have more”. As expected, he proposes to cut the dividend allowance from £2,000 to £1,000 next year and then to £500. The capital gains tax annual exemption is to be halved to £6,000 next year and further cut to £3,000 in 2024. The threshold at which the additional rate tax of 45% kicks in is to be reduced from £150,000 to £125,140; the level at which the personal allowance tapers away for high earners.

While the concept of the rich paying their “fair share” may be regarded as fair, and also politically attractive to some, these measures will not raise large amounts of revenue. The current additional rate tax take is only about £2bn a year. Although the reduction in the threshold will increase the number paying the highest rate, it is likely to raise only a few hundred millions a year. Similarly, the cuts in capital gains tax and dividend allowance will not fill the black hole in the economy.

The further freezing of tax thresholds until April 2028, on the other hand, which many regard as a “stealth tax”, does have the potential to raise a lot of money. Whilst a further freeze on the inheritance tax nil rate bands would raise only an additional £500m, the latest analysis from the Institute of Fiscal studies shows that with inflation soaring and wages and pensions increasing as a result, maintaining the current freeze on income tax thresholds could raise £30bn for the Treasury over four years as a result of fiscal drag.

Whilst Mr Hunt has retained his predecessor’s cuts in stamp duty land tax-the levy on purchasing a home or other land, for the time being in order to stimulate the housing market, the thresholds will revert to the previous lower levels in 2025, which the Treasury predicts will raise an additional £180m in 2024/25 rising to £1.635bn in 2027/28.

More money is also being poured into resources for HMRC to make sure that individuals and businesses pay the tax they ought to pay. The “tax gap” (the difference between the tax paid and what HMRC think should be paid) has reduced over recent years as HMRC pursue those deliberately evading tax and encourage more accurate compliance from those trying to do the right thing. The additional resources are being used to strengthen HMRC’s approach to serious fraud, and to increase HMRC’s capacity to deal with complex tax risks amongst wealthy taxpayers.

One welcome change is the implementation of the Office of Tax Simplification’s recommendation that the time for separating and divorcing couples to sort out their financial arrangements without a capital gains tax charge should be extended to three years.”

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