In his Autumn Statement, Chancellor Jeremy Hunt unleashed a wave of tax increases targeting private investors, by Christian Leeming

DIY investors, ‘doing the right thing’ by taking personal control of their finances, proved irresistible to a Chancellor seeking to fill a £50bn ‘black hole’ that his party played no small role in creating. 

Revealing that the UK is already in recession, Mr Hunt announced a whole raft of tax hikes to try to balance the books and said that the economy is set to shrink still further next year.  

Setting out his priorities as being stability, growth and public services, Hunt said that the planned tax rises and spending cuts would lead to a ‘shallower downturn’. 

He said that the personal tax measures he announced were based on asking ‘those with more to contribute more’; critics say that he is picking the pocket of the ‘squeezed middle’ as benefits and pensions remain index linked. 

If we believe in the inevitability of death and taxes, here are some of the planned changes, and some suggestions for those looking to take maximum advantage of tax wrappers and tax-efficient investment opportunities. 


Personal taxation 


The personal tax-free allowance of £12,570 and higher rate threshold of £50,270 for income tax will be frozen up to and including 2027/28.  

Seen by many as a stealth tax, not increasing allowances in line with the cost-of-living forces millions of earners to pay more tax as wages go up. Also known as ‘fiscal drag’, workers and investors end up paying more tax, but without the government increasing headline tax rates. 

Income tax for the highest earners is also increased, as in future the 45% additional rate of tax will kick in at £125,140 rather than £150,000; someone earning £150,000 will pay an extra £1,250 a year in tax. 

Tax rates are 20% between £12,571 to £50,270, 40% from £50,271 to £125,140, and anything above that at 45%. 

With the ‘triple lock’ preserved, more pensioners could become liable for income tax, as the full state pension amount of £9,600 closes in on the personal allowance of £12,570; those with additional sources of income could find themselves paying income tax. 


Dividend tax 


The dividend allowance will be cut from £2,000 to £1,000 in 2023 and then £500 from April 2024. Dividends in excess of the allowance, are taxed at a rate depending on how much other income is received.  

For basic rate taxpayers the dividend tax is 8.5%, higher rate taxpayers it’s 33.75%, and top rate taxpayers 39.35%. 

Investors who hold money in funds or shares outside a pension or an ISA will face a greater tax burden. 

Private investors therefore could face greater tax bills if they do not take action before the new tax year; the first point of action is to take full advantage of ISA and pension tax allowances. 

ISAs allow investors to put up to £20,000 a year into tax-free account. Investments held inside an ISA or not subject to capital gains or income tax. Money going into an ISA has already been taxed via income tax and national insurance contributions. 

ISAs can be accessed at any time and are great for financing big-ticket expenses in life, such as school fees, a wedding, or clearing a mortgage. 


Capital Gains Tax 


Following his ‘reform’ (or ‘raid’, according to your perspective) on ‘unearned income’, the threshold for paying capital gains tax (CGT) has been halved from £12,300 to £6,000 for 2023/24; it will be cut again to £3,000 in the 2024/25 tax year. 

CGT is due when certain items worth more than £6,000 are sold (or gifted) such as antiques or art, or assets including second homes and shares held outside of an ISA; investors with capital gains over these thresholds pay 20%, or 10% if this amount is within the basic income tax band. 

CGT raised £14.3 billion in 2020/21, from 323,000 individuals. 



Stamp duty 


Reduced stamp duty rates will continue until March 2025, when the nil-rate threshold will be cut from £250,000 to £125,000. The nil-rate threshold for first-time buyers will fall from £425,000 to £300,000 and the maximum purchase price which first time buyers’ relief can be applied to will fall from £625,000 to £500,000. 

This may appeal in the short term as the financial pressure of buying a home is being fueled by higher mortgage rates and the rising cost of living, but a result could be temporarily inflated house prices as people rush to make the deadline. 





A 10.1% increase has been announced from April, in line with inflation, along with an extra cost of living payment of £300. Pension Credit was also uprated by 10.1%, boosting the income of single pensioners to around £201 per week. 

Up to £40,000 can be invested into a pension every year. Contributions get tax relief on the way in, either via self-assessment rebates or via employers, where contributions are made before taxes are applied. 

There is a ‘lifetime allowance’, where savings that breach the limit of £1,073,100 are taxed at 55%. 25% of a pension pot can be withdrawn tax-free, with the rest charged at usual income tax rates. 

For most people, using both ISAs and SIPPS is prudent. ISAs can be accessed at any time and are great for financing big-ticket expenses in life, such as school fees or a wedding, or for clearing a mortgage. 

Pension assets are typically tied up until age 55 (rising to 57 in 2028), but can supercharge your retirement savings due to the upfront tax relief. 


Household bills 


The chancellor extended the household energy price cap for one year beyond April, but made it less generous, with typical bills capped at £3,000 a year instead of £2,500; bills could hit £4,000 without support. 

Meanwhile, he announced that councils can raise tax by 5% without holding a local vote compared with the existing 3% plus an additional 2% if they have social care responsibilities. 

Other investment strategies 

Savers who have maxed out their pension and ISA allowances could look to Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs), which offer generous tax relief to encourage investment in unlisted companies. 

When investors sell EIS and VCT shares, gains are free from CGT so long as the investment is held for at least three years, and five years respectively. Investors can also claim 30% tax relief on income, up to £1 million, which amounts to £300,000 of income tax relief.  Dividends paid are tax free for VCTs but not EISs. 

However, such schemes own risky smaller companies and there is no guarantee that they will make a positive return, although some losses can be offset against a tax bill; diligent research is highly recommended. 

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