On 17 November 2022, the government delivered the first Autumn Statement under the leadership of the UK’s newest Prime Minister Rishi Sunak, set out in detail by Jeremy Hunt the UK’s new Chancellor. Given the financial turmoil created by their predecessor’s Mini Budget (on 23 September 2022), the goal was to regain trust and the UK’s reputation in the markets.

Against a backdrop of rising inflation and economic recession the Chancellor laid out three core priorities of stability, growth and public services. The government sought a balanced path to support the economy and return to growth, partially through public spending restraint and partially through tax rises.

Careful orchestration had seen most of the policy decisions presented in the media in days running up to the announcement in an attempt to cool the markets and counter any unwanted surprises. Summarised below are the key announcements that are relevant to the asset management industry.

Income Tax

Rather than increasing headline rates of income tax the government is instead relying on fiscal drag to raise taxation on household incomes. The income tax personal allowance and higher rate threshold (of £12,570 and £50,270 respectively) were already fixed at their current levels until April 2026 but will now be maintained for an additional two years until April 2028.

However, most eye-catching for the industry is the news that the 45% additional tax threshold will be lowered from £150,000 to £125,140 from 6 April 2023 – costing individuals up to an additional £1,243 each. This has now gone full circle, with the rate previously due to be scrapped under the Mini Budget plans only to be withdrawn 10 days later.

As expected the basic rate of income tax will remain at 20%, despite previous attempts to reduce it to 19%. The higher rate will remain stable at 40% and, as is typical, there was no mention of the effective 60% rate band between £100,000 to £125,140 where the personal allowance is clawed back – that costs each individual up to £5,028.

National Insurance Contributions

Perhaps somewhat surprisingly there was no attempt to reintroduce the 1.25% Health and Social Care Levy introduced by Rishi Sunak at the beginning of 2022/2023 that was subsequently reversed by the Truss government effective from 6 November 2022.

For employees and employers, the changes took effect for payments of earnings made on or after 6 November 2022, so:

  • Primary Class 1 NICs (employees) generally reduced from 13.25% to 12% and 3.25% to 2% and
  • Secondary Class 1 NICs (employers) reduced from 15.05% to 13.8%.

The effect on Class 1A (payable by employers on taxable benefits in kind) and Class 1B (payable by employers on PAYE Settlement Agreements) NICs will effectively be averaged over the 2022/23 tax year, so that the rate will generally be 14.53%.

For the self-employed, following the principle detailed above, the changes to Class 4 NICs will again be averaged across 2022/23, so that the rates will be 9.73% and 2.73%. Similar to the income tax thresholds, the NICs upper earnings limit, upper profits limits and Class 2 lower profits threshold will remain fixed at their April 2023 levels until April 2028, along with the level at which employers start to pay Class 1 NICs for their employees.

Corporation Tax

It had been previously announced that the expected increase in the rate of corporation tax for many companies from April 2023 to 25% would not go ahead. However, the government announced on 14 October 2022 that this increase will now proceed and this has been confirmed.

No further changes were announced in the Autumn Statement on the headline rate. This means that, from April 2023, the rate will increase to 25% for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief.

It had been previously announced that the expected increase in the rate of corporation tax for many companies from April 2023 to 25% would not go ahead. However, the government announced on 14 October 2022 that this increase will now proceed and this has been confirmed.


The government has also confirmed that, from April 2023, the rates of taxation on dividend income will remain as follows:

  • Ordinary rate – 8.75%
  • Upper rate – 33.75%
  • Additional rate – 39.35%

Given that these rates increased in line with the 1.25% Health and Social Care Levy it is odd they have not also been reduced. As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%. In addition, the government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024.

UK asset managers will again be looking at the comparison between LLP and Ltd structures, factoring in both recent changes and the previously announced increases in corporation tax. The effective tax differential between profit allocations to self-employed individuals and employees increased temporarily from April to November 2022, from 6.43% to 6.77%. As such HMRC’s interpretation of the salaried and mixed member rules and associated scrutiny placed on managers is set to continue. The widening gap feels ripe for filling with something equivalent to the employer’s NIC, albeit this needs to be balanced with the lack of optionality to roll-up profits under the mixed membership rules.

The most significant movement in terms of structural choice is the increased effective rate of corporation tax and dividend tax combined which from April 2023 becomes higher than extracting value through taking a bonus. This is a substantial change noting that in 2015/16 extracting value via dividends was actually more beneficial than an LLP structure. However, such a position needs to be considered in the context of rolling up value in a corporate vehicle and associated planning opportunities.

Capital Gains

The government has announced that the capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. However, the headline rate will remain at 20% for standard gains meaning the reporting fund status will continue to be a valuable regime for investors whilst the differential between income tax and capital gains tax rates remains. Carried interest will continue to be taxed at 28%, but the private equity industry will have listened intently to the shadow chancellor’s vociferous response to the Autumn Statement which again singled out the current treatment of carried interest as a key area for reform.

Additionally, a measure to counter avoidance by non-domiciled individuals utilising share-for-share transactions to shelter value built up in UK securities was announced with immediate effect. This demonstrates that the government will continue to act to tackle perceived avoidance. However further changes to the non-domicile regime were not forthcoming, despite calls from some political corners to curtail the regime.

Transfer Pricing Documentation

From April 2023, large multinational businesses operating in the UK will be required to keep and retain transfer pricing documentation in a prescribed and standardised format, set out in the OECD’s Transfer Pricing Guidelines (Master File and Local File). Whilst not a new announcement the Chancellor reiterated the government’s intention to adopt the rules in line with other OECD countries. In practice this should only hit a minority of the asset management industry as the requirement is expected to align with the Country-by-Country Reporting (CbCR) regime that applies to groups with a consolidated group revenue of more than €750 million. This will be legislated for in Spring Finance Bill 2023.

Additionally, HMRC will continue to consult on a Summary Audit Trail which is a questionnaire that businesses would be required to complete that covers the main steps undertaken in preparing the Local File. There have been concerns that this could present a particularly onerous administrative burden on taxpayers. Regardless of size, best practice is that all asset managers should maintain and document an OECD compliant transfer pricing policy given the potential interaction with the UK’s investment management exemption (IME) and disguised investment management fee legislation.

OECD Pillar 2

Following consultation, the government will legislate to implement the globally agreed G20-OECD Inclusive Framework Pillar 2 in the UK. For accounting periods beginning on or after 31 December 2023 the government will:

  • Introduce an Income Inclusion Rule (IIR) which will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%
  • Introduce a supplementary Qualified Domestic Minimum Top-up Tax (QDMTT) rule which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%

Both the IIR and QDMTT will incorporate the substance based income exclusion that formed part of the G20-OECD agreement. This will be legislated for in Spring Finance Bill 2023. The government intends to implement the backstop Undertaxed Profits Rule in the UK, but with effect no earlier than accounting periods beginning on or after 31 December 2024.

The measure represents a fundamental shift in global taxation aimed at international structures exploiting low tax jurisdictions with the UK expecting to raise an additional £2 billion per annum. The measure again aligns with the CbCR regime, meaning most asset managers in the UK should not be impacted, however potential application to fund structures will need to be considered and any associated carve outs.

Capital Allowances

The Annual Investment Allowance (AIA) gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit has been £1 million for some time but was scheduled to reduce to £200,000 from April 2023. The government has announced that the temporary £1 million level of the AIA will become permanent and the proposed reduction will not occur.

Up to 31 March 2023, companies investing in qualifying new plant and machinery are able to benefit from capital allowances, generally referred to as ‘super-deductions’. These reliefs are not available for unincorporated businesses.

Asset managers incurring expenditure on plant and machinery should carefully consider the timing of their acquisitions to optimise their cashflow.

The government will also extend the 100% first year allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

Research and Development

For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20% but the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86% and the SME credit rate will decrease from 14.5% to 10%. This is extremely disappointing news for asset managers that invest in developing cutting edge technology. In recent years government support in this area has seen R&D teams in the sector flourish and the move appears to send the wrong message when growth is a priority.

The government will consult on the design of a single scheme and consider whether further support is necessary for R&D intensive SMEs. As previously announced at Autumn Budget 2021, the R&D tax reliefs will be reformed by expanding qualifying expenditure to include data and cloud costs, refocusing support towards innovation in the UK, and targeting abuse and improving compliance.


No specific announcements were made in relation to crypto currencies, however draft legislation is expected soon in relation to the inclusion of crypto assets on the IME list for investment transactions. This follows a successful consultation earlier in the year.

No specific announcements were made in relation to crypto currencies, however draft legislation is expected soon in relation to the inclusion of crypto assets on the IME list for investment transactions. This follows a successful consultation earlier in the year. Asset managers in this space will welcome the additional certainty that this will provide.

Seed Enterprise Investment Scheme

From April 2023, companies will be able to raise up to £250,000 of Seed Enterprise Investment Scheme (SEIS) investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from two to three years. To support these increases, the annual investor limit will be doubled to £200,000.

Company Share Option Plan

From April 2023, qualifying companies will be able to issue up to £60,000 of Company Share Option Plan (CSOP) options to employees, twice the current £30,000 limit. The ‘worth having’ restriction on share classes within CSOP will be eased, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.


The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively. The industry remains hopeful progress can be made on VAT in relation to investment management fees to support UK based fund vehicles.

Stamp Duty Land Tax

A number of changes were made to the Stamp Duty Land Tax (SDLT) regime earlier this year and these remain. Generally, the changes increase the amount that a purchaser can pay for residential property before they become liable for SDLT.

The residential nil rate tax threshold increased from £125,000 to £250,000.

The nil rate threshold for First Time Buyers’ Relief increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief increased to £625,000.

The changes apply to transactions with effective dates on and after 23 September 2022 in England and Northern Ireland. These changes do not apply to Scotland or Wales which operate their own land transactions taxes.

The 3% surcharge on second properties remains and there are no changes in relation to purchases of non-residential property.

Inheritance tax

The inheritance tax nil-rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000 and the residence nil-rate band taper will continue to start at £2 million.


The government will set the rates for the taxation of company car benefits until April 2028 to provide long term certainty for taxpayers and industry. Rates will continue to incentivise the take up of electric vehicles.

In addition, from 6 April 2023 car and van fuel benefits and the van benefit charge will increase in line with inflation.

In addition, from April 2025 electric cars, vans and motorcycles will begin to pay Vehicle Excise Duty in the same way as petrol and diesel vehicles. According to the government, this will ensure that all road users begin to pay a fair tax contribution as the take up of electric vehicles continues to accelerate.


The Autumn Statement sets out reforms to ensure businesses in the energy sector who are making extraordinary profits contribute more. From 1 January 2023, the Energy Profits Levy will be increased to 35% and extended to the end of March 2028 and a new, temporary 45% Electricity Generator Levy will be applied on the extraordinary returns being made by electricity generators.

The Energy Price Guarantee (EPG) will be maintained through the winter, limiting typical energy bills to £2,500 per year. From April 2023 the EPG will rise to £3,000.

The government is also setting a national ambition to reduce energy consumption by 15% by 2030, delivered through public and private investment, and a range of cost-free and low-cost steps to reduce energy demand.