Yesterday Jeremy Hunt unveiled his first budget as chancellor in the House of Commons.

Highlights from the statement:

Income tax higher rate band decreased from £150,000 to £125,140

This will mean that not only will individuals whose income exceeds £100,000 start to lose their personal allowance, once their income hits £125,140 all of their personal allowance will have been lost and they will also have reached the threshold for paying the top rate of tax. So more people will pay that highest rate. The Basic rate band and Personal allowance are both frozen, at £50,270 and £12,570, until 2028.

Annual exempt amount for CGT cut to £6,000

The Tax free allowance before individuals have to pay Capital Gains tax has been cut from £12,300 to £6,000, and will be cut further to £3,000 in 2024. This will effect individuals selling things such as residential properties and shares.

Dividend allowance halved from £2,000 to £1,000

From April 2023 the dividend allowance will be halved, with it being halved again to £500 in April 2024. This is further to the dividend tax rates being increased from April 2022.

NI Thresholds frozen until April 2028

Mr Hunt also confirmed that the main National Insurance thresholds will remain frozen until 2028. This includes Employers and Employees NI. This isn’t paid by people over the state pension age even if they are working. But with the thresholds being frozen rather than rising, this means as people get wage rises, people on lower wages will start to pay National Insurance who wouldn’t have previously as they will be pushed over the threshold.

Inheritance tax nil rate bands frozen until 2027-2028

Originally planned to only be frozen until 2025-26.

State pension to rise

In line with inflation at 10.1%

National Living Wage to rise for over 23’s

From £9.50 per hour to £10.42 per hour

Business taxes:

R&D – SME scheme deduction rate cut. RDEC (Large companies) increased

It was announced that the enhanced deduction rate for the SME scheme will be cut to 86% from 130%, and the tax credit to 10%. For those with large companies (500+ employees and annual turnover over 100 million euros/balance sheet figure exceeding 86 million euros) the rate will however be increased from 13% of the qualifying expenditure to 20%.

VAT Threshold frozen until March 2026

Mr Hunt says that as the threshold is already more than twice as high as the EU average, this would be maintained at its current level until March 2026.

Employers NI

The threshold will be frozen until April 2028, and the employment allowance will be retained at a higher level of £5,000, meaning more businesses Employers NI will be fully covered.

To find out more about what the budget means for you, click the link below to read our full summary.