On 23 September the then Chancellor Kwasi Kwarteng delivered his first “fiscal update” – Mini Budget 2022 as many have dubbed. The markets did not respond well to the budget and as a result Kwasi was sacked and Jeremy Hunt appointed – who promptly reversed almost all of the announcements. Little remains, but we look at what happened and how the land now lies:
Personal tax and National Insurance
- National Insurance Contributions – the increase of 1.25% introduced in April 2022 for employees and employers will be reversed from 6 November 2022. In good news for employees the increase of the NIC starting point to £12,570 in July will remain. The Health and Social Care Levy that was due to replace the NIC increase in April 2023 will now not go ahead as planned.
- Originally it was announced that the dividend tax rates which were increased by 1.25% in April 2022 would be reversed from April 2023. However in a reversal to the reversal (still with us??) the increase stands, meaning a basic rate of 8.75%, a higher rate of 33.75% and an additional rate of 39.35%.
- Income tax – although the statement contained an announcement that the additional rate of income tax would be removed from 6 April 2023, on 3 October 2022 the Chancellor (still Kwasi at this point) announced they would not be going ahead with this move.
Business tax
- In the initial mini budget the plan to increase corporation tax in April 2023 was to be repealed before it was even introduced. However, on 14 October there was a U-turn and the increase will now go ahead as planned on 1 April 2023. This means a rate of 25% for those companies with taxable profits over £250,000 in a year, and an effective rate of 26.5% for those with taxable profits between £50,000 and £250,000.
- This ones remains!! (at the time of writing). The Annual Investment Allowance, AIA, which gives businesses a 100% tax deduction on qualifying plant and machinery, will not now revert back to £200,000 in April 2023, but will remain at £1m permanently.
Personal Services Companies (IR35)
- Initially the mini-budget announced that the rules introduced in 2017 and 2021 would be scrapped – these rules broadly shifted the liability for assessment of whether someone was a quasi employee and IR35 should apply to the company seeking the services rather than the Personal Service Company (PSC). However this too was reversed and these rules still stand.
Stamp Duty Land Tax (SDLT)
- From 23 September 2022 buyers will now not pay SDLT on the first £250,000 of a property’s purchase price, up from £125,000. For first time buyers, their nil rate band was increased from £300,000 to £425,000. The additional 3% charge for second properties remains.
The now Chancellor Jeremy Hunt (at least at the time of writing!) has warned of difficult times ahead. What is certainly apparent is the need to have a proactive tax advisor to discuss the impact on you and your business, and highlight those opportunities that still exist. If you would like to discuss what this means for you and/or your business please do not hesitate to contact us at Veritons.