CUMBRIA-based accountancy firm Lamont Pridmore says the decision to freeze and reduce personal tax reliefs, thresholds, and allowances in the Autumn Statement will have a significant impact on many taxpayers. 

Faced with the challenge of inflation, rising energy costs, and higher interest rates, as well as an economy weakened in recent months by world events and the actions of his predecessor, the Chancellor outlined his 'plan for stability'. 

Having reviewed the Government's new fiscal policies, Lamont Pridmore says that while it has the potential to steady national finances, it will come at a cost.    

The Chancellor was keen to point out that his latest measures avoided increases to tax rates, but the reality of his speech means that tax bills for many business owners and workers will increase over the next few years.

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A big element of this increase was his decision to extend the freeze on personal allowances, such as the Nil-Rate Band for Inheritance Tax and the Personal Allowance for Income Tax, until 2028. 

Graham Lamont, Chief Executive at Lamont Pridmore, said: "These allowances were already frozen until 2026, but the decision to further delay increases means that inflation is likely to drag more taxpayers into higher tax bands as their wages rise.

"To many observers, the Autumn Statement may have seemed quite fair and balanced, but there are certain groups, particularly high earners, who will need to think carefully about how these measures affect them."

When it came to the finances of businesses, Lamont Pridmore said that the £13.6 billion of support to help with the transition to a new business rates system over the next five years was welcomed and would help those hit hardest in recent years, including bars, restaurants, and retailers on the High Street. 

However, further changes to the SME R and D tax system would be less welcome, especially the reduction to the SME scheme additional tax deduction, which will fall from 130 per cent to 86 per cent for expenditure on or after 1 April 2023. 

"The Government has been concerned about abuse in this tax system for some time, but it seems somewhat unfair to penalise those who have acted within the existing rules," said Graham.

"However, the real impact of this change may not be as great as feared due to the rise in Corporation Tax from April, which may mean that the amount of relief businesses receive won't change significantly, especially for those paying the top 25 per cent rate of tax."

Lamont Pridmore said that subtle but important changes in the Autumn Statement required careful consideration and professional advice.